MASTER 
NEGATIVE 

NO.  94-82090- 15 


COPYRIGHT  STATEMENT 


The  copyright  law  of  the  United  States  (Title  17,  United  States  Code) 
governs  the  making  of  photocopies  or  other  reproductions  of  copyrighted 
materials  including  foreign  works  under  certain  conditions.  In  addition, 
the  United  States  extends  protection  to  foreign  works  by  means  of 
various  international  conventions,  bilateral  agreements,  and 
proclamations. 

Under  certain  conditions  specified  in  the  law,  libraries  and  archives  are 
authorized  to  furnish  a  photocopy  or  other  reproduction.  One  of  these 
specified  conditions  is  that  the  photocopy  or  reproduction  is  not  to  be 
"used  for  any  purpose  other  than  private  study,  scholarship,  or  research." 
If  a  user  makes  a  request  for,  or  ater  uses,  a  photocopy  or  reproduction 
for  purposes  in  excess  of  "fair  use,"  that  user  may  be  liable  for  copyright 
infringement. 

The  Columbia  University  Libraries  reserve  the  right  to  refuse  to  accept  a 
copying  order  if,  in  its  judgement,  fulfillment  of  the  order  would  involve 
violation  of  the  copyright  law. 


Author: 

U.S.  Federal  Trade 
Commission 

Title: 

Report  of  the  Federal 
Trade  commission  on 

Place: 

Washington,  D.C. 

Date: 

1917 


MASTER    NEGATIVE   # 


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U.  S.   Federal  trade  commission. 

Report  of  the  Federal  trade  commission  on  tlie  news- 
piGtjiaperJndustrx.  June  13, 1917.  Washington,  Govt, 
print,  off.,  1917. 

162  p.    25'^"'. 


1.  Paper  making  and  trade — U.  S.        i.  Title. 

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REPORT 


OF 


?HE  FEDERAL  TRADE  COMMISSION 


ON  THE 


NEWS-PRINT  PAPER 
INDUSTRY 


LIBRXFY 
SCHOOL  OF  BUSINESS^ 


JUNE  13,  1917 


WASHINGTON 
GOVERNMENT  PRINTING  OFFICE 
1917 


rm. 


LIBRARY 


School  of  Business 


REPORT 


OF 


THE  FEDERAL  TRADE  COMMISSION 


ON  THE 


NEWS-PRINT  PAPER 
INDUSTRY 


JUNE  13,  1917 


WASHINGTON 
GOVERNMENT  PRINTING  OFFICE 
1917 


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F.      ! 


I 


SENATE  RESOLUTION  NO.  87. 

(Reported  by  Mr.  Smith,  of  Arizona.J 


In  the  Senate  of  the  United  States, 
ResnlvP^  TKof  fi.  June  19  {calendar  day  June  20),  1917, 

Attest : 

James  M.  Baker, 
2  Secre  tary. 


3 


f/ 

r 


^ 
^    ^ 


CONTENTS. 


Letter  of  Bubmittal ^ 

Chapter  I.— INTRODUCTION. 

Sec.  1.  Origin  of  investigation 

2.  Petition  of  news-print  manufacturers * -,« 

3.  Cooperation  of  publishers'  associations ' '  *  * ^r 

4.  Scope  of  investigation 

Price  inquiry 

Cost  inquiry 

Supply  and  demand  factors -.« 

Activities  of  manufacturers  and  jobbers ......*.*.*.'.*"  19 

Conclusions  and  recommendations \ •« 

5.  Efforts  for  immediate  relief  of  publishers *.'*.'  .*.'*.'.'.' 19 

Chapter  II.— GENERAL  DESCRIPTION  OF  THE  NEWS-PRINT  PAPER 

INDUSTRY. 

Sec.  I.  Introduction 

2^ 

Daily  newspapers 

Weekly  newspapers ^o 

2.  Development  of  the  news-print  industry oq 

Rank  of  industry 

Period  prior  to  1910 

Period  subsequent  to  1910 ^     ^4 

S.  Process  of  production 

Mechanical  pulp _. 

Chemical  pulp ^ 

Paper  making 

4.  Domestic  and  Canadian  companies "  *        nr^ 

Production  and  shipments «, 

Equipment „. 

Consumption  of  raw  materials " "  07 

5.  News-Print  Manufacturers  Association "  *  4^ 

6.  Paper  jobbers  and  sales  agents ^ 

7.  Imports  and  exports  of  news-print  paper *  *  43 

Imports .*.!!!!!.!!....        43 

Import  duties 4- 

Exports 4- 

3 


'  CONTENTS. 

Chaptbr  III.-PRICES  OF  NEWS-PRINT  PAPER. 

Sec.  1.  Introduction 

2.  Open-market  pri^'/.V '.'*'' ***'*'**'*" 

Range  of  open-market  prices  of  roil  news 

^ge  of  open-market  prices  of  sheet  news../.* 

Prices  of  ready-print  sheets 

S.  Contract  prices ' 

Provisions  of  contracts 

Range  of  prices  on  contracts  for  1,000*  ions  or  over 

Range  of  prices  on  contracts  for  100  to  999  tons  

Range  of  prices  on  contracts  for  less  than  100  tons     

Pnces  on  contracts  covering  deUveries  in  1917  

Low  high,  and  average  prices  on  contracts  for  100  tons  or'over  *  * 

Contracts  in  force,  September  1,1916 

4.  Average  receipts  per  100  pounds  at  mill . ..'.'"  .".*.' 

6.  Effect  of  contract  system  on  prices * 

6.  Additional  cost  of  paper  to  publishers  in  1917 

7.  Disparity  in  prices  among  publishers '.".  * .'**.'''*.''* 

Chapter  IV.-JOBBERS'   COMMISSIONS  AND  MARGINS   OF  GROSS 

PROFIT. 


48 

51 

51 

52 

54 

55 

56 

58 

61 

63 

63 

64 

65 

67 

69 

69 

71 


Sec. 


1.  Introduction 

2.  Margins  of  profit  on  contracts 

3.  Margins  of  profit  on  open-market  sales' 

Margins  on  sheet  news,  1915-1916. 
Prices  and  margins  in  1917 

4.  Jobbers'  cost  of  doing  business 

i.  Conclusions 


Chapter  V.-OOSTS  AND  PROFITS  OF  MANUFACTURE. 

Sec.  1.  Introduction 

Items  eliminated  from  costs *  * 

Readjustment  of  depreciation 

Miscellaneous  readjustments ]  * 

2.  News-print  paper  costs,  1913-1916 

Average  costs  for  second  half  of  1916 

Percen  tage  of  cost _\ 

Cost  of  news-print  paper,  by  groups  of  mills .. ...., 

Cost  of  news-print  paper  by  individual  mills 
S.  Sulphite  costs,  1913-1916 

Average  costs  for  second  half  of  1916.....!.. 

Percentage  of  cost 

Cost  of  production  of  sulphite,  by  gi^oups  of  miils 

4.  uround-wood  costs,  1913-1916 

Average  costs  for  second  half  of  1916 

Percentage  of  cost 


^^^.'^f^^to^  producing  ground  wood,  by  groups  oVmdlis* 
6.  News-pnnt  paper  profits,  per  ton.  ^  s      i^      uuiia 


Average  profits  of  United  States  mills,  by  groups 
o.  iTonts  on  investment 


7.  Conduedons. 


73 
75 
77 
77 
77 
79 
80 


82 

82 

83 

84 

85 

89 

90 

91 

93 

96 

98 

98 

99 

100 

102 

103 

103 

104 

107 

110 

113 


CONTENTS.  5 

Chapter  VI.— SUPPLY  AND  DEMAND  FACTORS. 

Sec.  1.  Introduction j^ 

2.  Causes  of  domestic  demand jig 

Increase  in  circulation 1 1  g 

Increase  in  advertising -^20 

Effect  of  panic  conditions 121 

3.  Causes  of  foreign  demand j22 

4.  Causes  of  limited  supply \ * '  ^03 

5.  Prospective  supply  and  demand  for  1917 125 

6.  Conclusions *  -loe 

Chapter   VII.— EVIDENCE    OF  VIOLATIONS  OF  THE    ANTITRUST 

LAWS. 

Sec.  1.  The  News-Print  Manufacturers  Association 127 

2.  Allotment  of  customers ^28 

3.  Prorating  and  absorbing  tonnage  of  new  mills 129 

4.  Curtailment  of  production [  ^29 

6.  Canadian  joint  selling  agencies jon 

6.  Other  activities i«q 

Chapter  VIII.— SUMMARY  OF  PRINCIPAL  FACTS  WITH    CONCLU- 
SIONS AND  RECOMMENDATIONS. 

Sec.  1.  Principal  facts j^g 

Costs  of  production jon 

Present  conditions  serious jo* 

Causes  of  existing  conditions jgj 

2.  Conclusions ^q^ 

3.  Efforts  of  the  Commission  to  afford  relief 135 

Proposal  of  manufacturers 135 

Action  of  publishers 107 

Action  of  jobbers -loo 

Findings  of  the  Commission  as  to  fair  prices i3g 

4.  Recommendations j^ 


I) 


'H 


LIST  OF  TABLES. 


Page. 

1.  Production  and  shipments  of  news-print  paper  by  principal  United  States       ^ 

and  Canadian  companies,  191^-1916 "^ ' "  *  V. 

2.  Equipment  of  16  United  States  manufacturers  and  11  Canadian  manu-       ^ 

facturers  of  news-print  paper  in  1916 /  - 

3.  Percentage  of  sulphite  to  total  pulp  for  12  principal  United  States  compamefl 

and  9  principal  Canadian  companies,  191^1916  (first  half) ■•'•.,        ^ 

4.  Importe  into  the  United  States  of  printing  paper  valued  at  not  above  2.5        ^ 

cents  per  pound,  1911-1916 -  •  •  - '  •  • ^ 

5   Exports  of  news-print  paper  from  the  United  States,  1911-1916 « 

6.  Range  of  open-market  prices  to  publishers  on  purchases  of  18  tons  or  over, 

of  news-print  paper  in  rolls,  by  States,  1915-1916 .......... 

7.  Range  of  open-market  prices  to  publishers  on  purchases  of  1  to  17  tons,  in- 

elusive,  of  news-print  paper  in  sheete,  by  States.  1915-1916 -  -  - . .        M 

8.  Prices  of  the  Western  Newspaper  Union  for  ready-print  Bheete  per  quire  of 

six-column  quarto,  30^  by  44-50-pound  paper,  August  1,  1913-August  1,        ^^ 

1916,  inclusive • ' 

9   Range  of  prices  on  contracts  with  publishers  for  1,000  tons  or  over  of  news- 

print  paper  in  rolls,  by  cities,  1912-1916  (first  half) .•■■•-■.•■        ^^ 

10   K«.ge  of  prices  on  contracts  ^-ith  publishers  for  100  to  999  t«ns,  mclusive. 

of^ews-print  paper  in  rolls,  by  States,  191^1916  (first  half)...... ^^^        62 

11.  Lowest,  highest,  and  average  prices  on  contracts  ">»!' P"bl"bers  for  100  tons 

or  over  of  news-print  paper  in  rolls,  by  cities,  1912-1916  (first  half)...--        64 

12.  Dates  of  signing  contracts  with  publishers  for  100  tons  or  over  of  news-print 

paper,  in  force  on  September  1,  1916 -• ■; •■ 

13   Average  receipts  per  100  pounds  of  news-print  paper  at  miU  on  shipments, 

by  districts,  1913-1916  (first  half) ••"••1 

M   Jobbers'  commi«rions  and  margius,  in  percentages  of  cost  pnce,  on  contracto 

with  publishers  for  18  tons  and  over  of  news-pnnt  paper  in  rolls,  191i-       ^^ 

1916  (first  half) ," '.' "  i'    .1 

15.  Jobbers' margins,  in  percentages  of    purchase  price,  on  open-market  sales  to 

publishers  rf  1  to  17  tons,  inclusive,  of  news-prmt  paper  m  sheets,  by       ^^ 

eroups,  1915-1916  (first half) ; ' ' U ' '."j'cjV V ' 

16   Av^coet  of  manufacture  per  ton  of  news-print  paper  for  Umted  States 

and  Canadian  milU,  1913-1916  (first  half). .^. ;  •  ■  -  •  -  -  -  -  -  -  -  •  ■  ■ 

17.  Percentage  of  t»tal  cost  of  producing  news-pnnt  paper  attribuUble  t»  JMi- 

ticularitems-United  States  and  Canadian  mills  combmed-1913-1916       ^ 

18.ci^p.!^uctionofnew^printpaperinUra;edSto^^^^ 

investigation,  arranged  by  groups  according  to  cost  per  t»n,  1913-1916       ^^ 

19.  C<^ ^'ufacturepeVionof  ne;s.p;in;paper for^inapai  Uniteistat«       ^^ 

mills,  1915-1916  (first  half) ,* : "  V  "  Vt  *  -'rj  gIIII^  "o«\i 

20   Averag^  cost  of  manufacture  per  ton  of  sulphite  for  Unit^  States  and 
Canadian  mills,  1913^1916  (first  half ) 


LIST  OP  TABLES.  7 

21.  Percentage  of  total  coat  of  producing  sulphite  attributable  to  particular 

items— United  States  and  Canadian  mills  combined— 1913-1916  (first 

J^«) : 99 

22.  Cost  of  production  of  sulphite  in  United  States  mills  covered  by  the  investi- 

gation, arranged  by  groups  according  to  cost  per  ton,  1913-1916  (first  half).      100 

23.  Average  cost  of  manufacture,  per  ton,  of  ground  wood,  for  United  States 

and  Canadian  mills,  1913-1916  (first  half) iqI 

24.  Percentage  of  total  cost  of  producing  ground  wood  attributable  to  particular 

item*— United  States  and  Canadian  mills  combined— 1913-1916  (first 
1^^ 103 

25.  Cost  of  production  of  ground  wood  in  United  States  mills  covered  by  the 

investigation,  arranged  by  groups  according  to  cost  per  ton.  1913-1916 
(first  half) 20^ 

26.  Average  sales,  costs,  and  profits  per  ton  of  news-print  paper  for  United 

States  and  Canadian  mills,  1913-1916  (first  half) 105 

27.  Variations  in  the  profits  per  ton  of  news-print  paper  sold  by  United  States 

mills  covered  by  the  investigation,  by  groups,  1913-1916  (first  half) 108 

28.  Rates  of  profit  on  net  investment  of  15  United  States  companies,  1915-1916 

(first  half) jYY 

29.  Statistics  of  production,  imports,  exports,  and  stocks  of  news-print  paper, 

in  the  United  States,  1915-1916 '      hq 

30..  Average  daily  circulation  of  114  newspapers  in  English  and  10  in  foreign 

languages  with  a  circulation  exceeding  50,000  copies,  1913-1916 119 

31.  Average  daily  circulation  of  114  newspapers  printed  in  EngUsh,  grouped 

according  to  circulation,  1913-1916 120 

32.  Increase  in  the  columns  of  advertising  of  40  large  daily  newspapers,  first  half 

of  1916  over  preceding  half-year  periods 12I 


LIST  OF  EXHIBITS. 


1.  Petition  of  the  News-Print  Manufacturers  Association  to  the  Federal  Trad< 

Commission ,  ^^ 

142 

2.  The  Federal  Trade  Commission's  suggestion  of  smaller  Sunday  papers. . ." .'  143 

3.  Tariff  duties  on  printing  paper ^ .« 

4.  Tariff  duties  on  wood  pulp ,c^ 

5.  Contract  forms  for  the  sale  of  news  print ' "  * jci 

6.  Circulars  sent  out  by  jobbers  in  regard  to  the  high  prices  and  scarcity  of  paper !  154 

o 


\ 


ACKNOWLEDGMENT. 


w^ 


The  Commission  desires  to  mention  as  especially  c<  intributing  to 
the  preparation  of  this  report  Messrs.  E.  O.  Merchant,  Le  Claire 
Hoover,  and  William  T.  Chantland.  Messrs.  F.  L.  Hawes,  W.  K. 
Bendz,  W.  W.  Bays,  J.  K.  Arnold,  H.  L.  Anderson,  W.  P.  Sterns, 
J.  H.  Bradford,  and  A.  E.  Peterson  also  rendered  valuable  assistance. 


LETTER  OF  SUBMITTAL 


Federal  Trade  Commission, 

Washington^  June  13^  1917. 
To  the  President  of  the  Senate  : 

The  Federal  Trade  Commission  has  been  engaged  upon  an  inves- 
tigation of  the  news-print  paper  industry  pursuant  to  Senate  reso- 
lution 177,  Sixty-fourth  Congress  (Senator  Owen),  adopted  April 
24,  1916,  and  there  is  submitted  herewith  its  complete  report.  A 
preliminary  report  was  submitted  on  March  3,  1917,  which  con- 
tained a  summary  of  the  Commission's  activities  and  findings  in 
connection  with  the  investigation  and  which  recited  the  efforts  of 
the  Conmiission  through  processes  of  accommodation  and  arbitra- 
tion to  restore  competitive  conditions  in  the  industry  and  to  insure 
a  fair  price  to  consumers  of  news-print  paper  while  the  processes 
of  restoration  were  going  forward.  This  preliminary  report,  with 
some  revisions,  has  been  incorporated  in  the  complete  report  and 
will  be  found  in  Chapter  VIII,  which  contains  the  conclusions  and 
recommendations  of  the  Commission. 


INCREASED  PAPER  COST. 

The  consumption  of  news  print  paper  in  the  United  States  in  1916 
amounted  to  about  1,775,000  net  tons,  valued  at  more  than  $70,000,000. 
At  the  prices  now  prevailing  this  tonnage  will  cost  news-print  con- 
sumers in  1917  more  than  $105,000,000,  an  increase  of  $35,000,000, 
or  50  per  cent.  Most  of  this  increase  will  fall  upon  newspaper  pub- 
lishers. If  the  average  increase  in  cost  of  manufacture  in  1917  over 
1916  is  estimated  at  $10  per  ton,  which  is  liberal,  one-half  of  the 
$35,000,000  increase  in  paper  cost  represents  additional  profits  to  the 
manufacturers. 

lAILURE  OF  ARBITRATION  AGREEMENT. 

The  efforts  of  the  Commission  to  restore  competitive  conditions  in 
the  news-print  industry  expeditiously  and  to  arbitrate  and  effectively 
project  a  fair  price  for  news-print  paper  have  failed.  Since  the  ar- 
bitration agreement  referred  to  in  the  preliminary  report  was  en- 
tered into  with  some  of  the  manufacturers  of  news-print  papea*  and 
since  the  award  of  the  Commission  fixing  a  fair  price  for  news-print 

U 


12 


REPORT  ON   NEWS-PBINT  PAPER  INDUSTRY. 


iJ) 


paper  was  announced  a  Federal  grand  jury  for  the  southern  district 
Of  JVew  York,  partially  upon  evidence  furnished  by  the  Commis- 
sion   has  found  indictments  against  four  of  the  signatories  to  such 
arbitration  agreement  for  violations  of  the  Sherman  antitrust  law 
and  the  said  indictments  are  now  pending  for  trial.     From  the  time 
the  arbitration  agreement  was  signed  and  the  award  made,  and  prior 
hereto  the  Commission  has  bent  every  effort  to  bring  about  some  prac- 
tical relief  to  this  situation.     The  plan  failed  for  several  reasons,  the 
principal  reason  bemg  that  the  arrangement  was  voluntary  and  the 
Commission  had  no  power  or  warrant  under  the  law  to  make  it 
effective.     Several  of  the  manufacturers  signatory  to  the  agreement 
subsequent  to  the  finding  of  the  indictment  in  this  matter  notified  the 
Commission  that  they  would  not  proceed  under  such  arbitration 
agreement,     The  result  has  been  that  news-print  paper  has  been 
billed  and  sold  at  the  same  exorbitant  prices  that  obtained  in  many 
instances  theretofore.  ^ 

PRESENT  SITUATION  SERIOUS 

The  news-print  paper  situation  is  very  serious,  not  only  to  the 
consumers  of  paper  but  to  the  pubHc  generally  and  to  the  Govern- 
ment of  the  United  States,  which  is  itself  a  large  consumer  of  paper. 
Ihe  Commission  has  reason  to  believe  that  this  situation  will  be  still 
more  aggravated  and  serious  in  the  ensuing  months.    In  normal 
tunes  competitive  conditions  would  have  been  gradually  restored 
through  the  proce^es  of  law,  but  it  would  have  required  some  time 
to  translate  the  effect  into  the  prices  of  paper.    The  demand  for 
news-print  paper  is  constantly  increasing  and  gives  promise  of  still 
greater  mcrease  with  the  continuance  of  the  war.    The  supply  of 
news-print  paper  available  to  meet  this  demand  is  dependent  upon 
mills  already  m  existence.     This  supply  will  probably  not  exceed  the 
quantity  produced  last  year  and  may  be  less  owing  to  disturbances 
that  may  result  from  the  war.    Under  normal  conditions  it  takes 
from  twelve  months  to  two  years  to  bring  a  new  paper  mill  into 
operation.     Under  present  conditions  it  would  take  much  longer 
It  seems  probable,  therefore,  that  with  the  demand  for  news-print 
paper  mcreasmg  and  the  supply  remaining  constant  or  possibly 
dimmishmg  there  will  be  a  repetition  of  the  panic  market  of  la^ 
year  and  the  exaction  of  prices  that  are  entirely  out  of  measure  with 
the  cost  of  production.     The  consequences  to  thousands  of  smaller 
newspapers  and  to  many  of  the  larger  ones,  and  through  them  to  the 
reading  public,  will  be  most  serious. 

WAR  EMERGENCY  MEASURE  RECOMMENDED. 

By  reason  of  this  condition,  and  because  of  the  vital  interest  to 
the  pubbc  of  an  efficient  dissemination  of  news  in  this  crisis,  the 


LETTER   OF   SUBMITTAL. 


13 


Commission  recommends  as  a  war  emergency  measure  that  Congress 
by  appropriate  legislation  provide : 

(1)  That  all  mills  producing  and  all  agencies  distributing  print 
paper  and  mechanical  and  chemical  pulp  in  the  United  States  be 
operated  on  Government  account;  that  these  products  be  pooled  in 
the  hands  of  a  Government  agency  and  equitably  distributed  at  a 
price  based  upon  cost  of  production  and  distribution  plus  a  fair  profit 
per  ton. 

(2)  That  pursuant  thereto  some  Federal  agency  be  empowered  and 
directed  to  assume  the  supervision  and  control  thereof  during  the 
pendency  of  the  war. 

(3)  That,  by  reason  of  the  fact  that  approximately  75  per  cent 
of  the  production  of  news-print  paper  in  Canada  comes  into  the 
United  States,  proper  action  be  taken  to  secure  the  cooperation  of 
the  Canadian  Government  in  the  creation  of  a  similar  governmental 
agency  for  the  same  function,  which  shall  be  clothed  with  power 
and  authority  to  act  jointly  with  the  governmental  agency  of  the 
United  States  for  the  protection  of  the  consumers  and  manufacturers 
of  print  paper  and  the  public  of  the  United  States  and  Canada. 

(4)  That,  in  case  the  Canadian  Government  shall  not  join  in  such 
a  cooperative  enterprise,  then  importation  of  paper  and  mechanical 
and  chemical  pulp  into  the  United  States  shall  be  made  only  on  Gov- 
ernment account  to  or  through  the  Federal  agency  charged  with  such 
supervision  and  distribution. 

In  this  connection  the  Commission  desires  to  point  out  that  such 
a  plan  contemplates  the  operation  of  mills  under  their  present  man- 
agement and  the  use  of  the  present  distributing  agencies,  but  that 
such  use  and  operation  shall  be  for  the  public  good,  directed  by  a 
disinterested  public  agency  to  secure  equitable  distribution  and  a 
price  that  is  based  upon  a  fair  cost  of  production  and  a  fair  profit 
per  ton  to  be  determined  without  regard  to  the  panic  market  created 
by  unusual  and  abnormal  conditions.  This  plan  has  the  virtue  of 
being  analogous  to  those  plans  which  have  been  tried  and  success- 
fully operated  in  Great  Britain.  It  will  also  insure  the  maximum 
production  and  greatest  facility  in  transportation  and  distribution 
and  will  adapt  itself  readily  to  a  return  to  normal  competitive  con- 
ditions upon  the  conclusion  of  the  war. 
Respectfully  submitted. 

William  J.  Harris,  Chairman, 

Joseph  E.  Da  vies. 

William  B.  Colver. 

John  Franklin  Fori; 


I 


I  ' 


I?  ■ 


¥ 


CHAPTER  L 

INTEODUCTION. 

Section  1.  Origin  of  investigation. 

The  investigation  of  the  news-print  paper  industry  was  made  by 
the  Commission  pursuant  to  the  following  resolution  of  the  Senate 
of  the  United  States: 

Resolved^  That  the  Trade  Commission  is  hereby  requested  to 
inquire  into  the  increase  of  the  price  of  print  paper  during  the 
last  year,  and  ascertain  whether  or  not  the  newspapers  of  the 
United  States  are  being  subjected  to  unfair  practices  in  the  sale 
of  print  paper.* 

During  the  first  session  of  the  Sixty-fourth  Congress  complaints 
from  publishers  resulted  in  the  introduction  of  various  resolutions 
in  both  Houses  of  Congress  calling  for  an  investigation  of  the  rise  in 
prices  of  news-print  paper.  These  complaints  came  mainly  from  the 
smaller  publishers  not  protected  by  contracts,  who  were  the  first  to 
feel  the  increase  in  prices. 

Trade  papers  early  in  1916  pointed  out  a  probable  increase  in  con- 
sumption on  account  of  the  demand  for  advertising  space,  and 
warned  publishers  of  a  possible  scarcity.  On  April  5,  at  the  instance 
of  the  News-Print  Manufacturers  Association,  a  conference  was  held 
in  New  York  between  representatives  of  the  manufacturers  and  pub- 
lishers to  discuss  the  paper  situation.  The  purpose  of  the  manu- 
facturers in  seeking  this  conference  was  afterwards  set  forth  by  the 
secretary  of  the  association  in  an  interview  appearing  in  the  Editor 
and  Publisher,  October  7,  1916,  as  follows: 

We  were  approaching  a  crisis,  and,  unless  something  was  done 
to  curtail  the  demand,  to  conserve  the  supply,  we  could  see  that 
there  would  be  a  shortage  that  would  seriously  affect  newspapers, 
not  only  with  regard  to  the  quantity  they  might  desire,  but  as 
to  the  price,  for  it  must  be  perfectly  apparent  to  any  reasonable 
man  that  where  there  is  a  shortage  of  material — a  demand  in 
excess  of  the  supply,  with  first  one  and  then  the  other  bidding 
at  a  higher  rate  to  get  what  the  other  fellow  wants  and  must 
have — that  increased  prices  naturally  result. 

Nothing  was  accomplished  by  the  conference. 


^  S.  Bes.  177,  64th  Cong.,  Ist  sess.,  adopted  Apr.  24,  1916. 


15 


-Tjpfs.^wi-'TPI^'''''^' 


16 


BEPORT  ON    NEWS-PRINT  PAPER  INDUSTRY. 


Section  2.  Petition  of  news-print  manufacturers. 

On  May  6,  1916,  shortly  following  the  adoption  of  the  Senate  reso- 
lution above  referred  to,  the  News-Print  Manufacturers  Association 
made  formal  appearance  before  the  Commission  by  its  secretary  and 
attorneys,  who  presented  a  petition  signed  by  the  executive  commit- 
tee of  the  association,*  and  asked  that — 

as  soon  as  it  can  be  done  an  investigation  be  had  by  your  body 
into  this  question  in  accordance  with  the  Senate  resolution  above 
set  forth;  and  these  petitioners  respectfully  state  that  the^  will 
consider  it  a  privilege  to  furnish  this  Commission  any  informa- 
tion within  its  power. 

Under  date  of  May  9,  1916,  the  secretary  of  the  association  reiter- 
ated the  desire  of  both  Canadian  and  United  States  members  to 
cooperate  with  the  Commission  in  the  following  statement : 

It  is  our  earnest  desire  that  this  investigation  of  the  news- 
print paper  manufacturing  industry  shall  be  so  thorough  and 
complete  that  it  may  not  be  necessary  to  make  further  investiga- 
tions of  this  sort  for  some  time  to  come,  and  to  that  end  we 
tender  you  all  the  facilities  of  our  organization,  and  hope  that 
our  assistance  may  facilitate  the  investigation  both  in  point  of 
time  and  expense. 

The  cooperation  of  the  members  of  the  association  and  also  of  sev- 
eral domestic  companies  not  belonging  to  the  association,  all  of  which 
voluntarily  opened  their  books  to  the  Commission's  accountants  and 
agents  and  furnished  all  the  information  desired,  greatly  expedited 
the  progress  of  the  investigation,  and  also  made  it  possible  to  study 
the  industry  in  Canada  as  well  as  in  the  United  States. 

Section  3.  Cooperation  of  publishers'  associations. 

The  American  Newspaper  Publishers  Association,  National  Edi- 
torial Association,  Association  of  Pennsylvania  Dailies,  and  others 
have  cooperated  with  the  Commission  in  this  investigation.  Their 
representatives  attended  the  various  hearings  called  by  the  Commis- 
sion to  discuss  the  news-print  paper  situation,  and  their  officers  were 
active  in  urging  members  to  supply  information  called  for  by  sched- 
ules of  questions  which  the  Commission  sent  to  newspaper  publishers. 

Very  commendable  work  has  also  been  done  by  the  officers  of  these 
associations  in  urging  members  to  disallow  the  return  of  unsold  papers 
by  newsdealers,  to  eliminate  waste,  and  to  curtail  consumption. 
Early  in  March,  1916,  the  manager  of  the  American  Newspaper 
Publishers  Association  called  the  attention  of  the  members  to  the  re- 
duced stocks  of  news-print  paper  and  higher  current  prices,  and  sug- 
gested serious  consideration  of  economy  in  the  use  of  paper.  A  month 
later  a  bulletin  was  issued  declaring  that  reserve  stocks  were  ''  at  or 

«  For  foU  text  see  Exhibit  L 


INTRODUCTION. 


17 


about  the  danger  line,"  and  urging  that  "every  economy  should  be 
made  in  the  use  of  news  print  until  the  mills  have  had  an  opportunity 
to  replenish  their  reserve."  In  subsequent  bulletins  publishers  were 
continually  urged  to  eliminate  waste  and  curtail  consumption.  This 
association  has  also  inaugurated  campaigns  for  saving  waste  paper 
and  wrapping  paper  which  have  had  important  results. 

The  propaganda  spread  by  publishers'  associations,  trade  papers, 
etc.,  has  apparently  accomplished  much  good.  Reports  from  all 
parts  of  the  country  indicate  that  since  about  the  middle  of  1916 
many  publishers  have  been  working  individually  and  in  cooperation 
to  eliminate  wastes  and  to  reduce  their  consumption  to  the  minimum 
required  by  the  news  and  advertising  matter. 

In  a  bulletin  issued  by  the  American  Newspaper  Publishers  Asso- 
ciation, dated  October  21,  1916,  it  was  announced  that  54C  papers 
bad  reported  that  they  no  longer  allowed  papers  to  be  returned. 
Moreover,  90  had  increased  their  selling  price  and  21  had  advanced 
advertising  rates. 

In  response  to  its  letter  of  October  14,  1916,  encouraging  and 
urging  economy  of  news-print  paper,  especially  in  Sunday  editions, 
the  Federal  Trade  Commission  received  within  two  weeks  over  100 
responses  from  publishers  announcing  their  adherence  to  the  pro- 
posed policy  and  stating  in  nearly  all  instances  that  they  had 
already  instituted  some  economies.^ 

In  this  connection  attention  should  be  called  to  the  success  of  the 
New  York  Globe  in  meeting  increased  paper  costs  by  the  introduc- 
tion of  various  economies  and  the  adoption  of-  more  efficient  methods 
based  on  a  knowledge  of  costs.  The  publisher  of  this  newspaper 
issued  a  pamphlet  in  February,  1917,  giving  the  results  of  his  expe- 
rience and  study  of  methods  to  meet  the  abnormal  news-print 
situation.* 

Section  4.  Scope  of  investigation. 

Owing  to  the  importance  of  reporting  its  conclusions  as  quickly  as 
possible,  the  Commission  limited  its  inquiry  in  this  investigation  to 
the  subjects  especiaUy  pertinent  to  the  determination  of  the  causes 
of  the  present  increase  in  price.  In  Chapter  II,  however,  are  pre- 
sented some  data  of  a  general  nature  regarding  the  news-print  in- 
dustry which  will  be  of  value  to  the  reader  in  reaching  a  better 
understanding  of  the  price  question. 

Price  iNQuiRY.-The  first  inquiry  of  the  Commission  was  to  deter- 
nune  to  what  extent  prices  of  news-print  paper  had  risen  in  different 
localities.     For  this  purpose  agents  of  the  Commission  collected  a 


88569**- -17- 


>Por  extracts  from  these  letters,  see  Exhibit  2. 
•Newspaper  Efficiency,  by  Jason  Rogers. 


schedule  of  questions  sent  out  .^^y^^^^^lTe  presented  in  Ch-  ap- 
tained  by  this  branch  «t  '^^^::'^':;,Z'r^.et  prices  to  pu  ^b- 
ter  III,  which  shows  the  contract  »"       P  •  j^      .^i^us  years.   ^     ^  . 

Ushers  in  different  localities  in  1916  ''^  ^f^*    ^^led  the  Commission      \U 
The  price  ^^^^^^^'^^^J^^^:"::!  matins  of  gross  profit      >^ 
t  STcor^dtith  p"  ears.    These  data  are  presented  in 

Chapter  IV.  imnortant  questions  involved  in  this 

Cost  i«Q^^--0««^/1  '^^  ^fse  in  prices  was  justified  by  the 
investigation  was  whether  the  m^^ease       P^^^.^^  ^^.^  ^^^.^^  ^^^ 

increase  in  the  cost  of  'n»''^**?*"'t  ^^^  „f  ^^^t  of  the  manufacturers 
Commission  sent  its  agents  to  f/  "fj^  "^  °he  cost  figures  from 
in  the  United  States  and  Canada  and  obtained  «^  ^^^  ^^^ 

January  1,1913,  to  June  30  1916  d^re^^^  ,1,,  method  of 

panies,  together  with  *«"  "^^^^'^^.J^  belonging  to  the  News- 
handling  costs.    The  Canadian  manufa»be^P  g  ^^^^^^  ^^^ 

Print  Manufacturers  ^^«'^*7't  *^°"^ts  was  furnished  by  the 
Commission  with  the  ^^  ^^aTe  ^  L^lured  f  or  a  part  of 
United  States  companies.    Costs  nave  u 

the  second  -^  ^^^^^^^^^^^  experienced  in  this  phase  of  the  in- 

considerable ditticuity  wab      ^  .      •  ^  systems  of  dif- 

.estigation  owing  ^^^  ^lasL  thfreS.1  o*  the  companies  were 
ferent  companij^  {^^^  l*Tmp5ble  to  ascertain  their  costs, 
so  incomplete  that  it  was  imp  ^^^  one-half 

in  addition  to  obUining  -f  ^^J^  ^,,,^  information  re- 
years  ending  June  30  1916,  the  Co  ^^^  ^^^.^  investments  in 
garding  the  profi^  of  the  man  .^^^^^^^  .^  ^ 
plants  and  woodlands,     inis  was                                           ^^  ^^^ 
Lcertain  whether  prices  P^-J"  *f  JJ^  rXrn  upon  the  invest- 
-  was  claimed,  -/^^^''J^^J^^t^^^^              accouL  of  the  char- 
ment  in  the  business.    "  ^»^J^^    ^^^^  ^^^  conducting  the  inves- 
acter  of  the  records  and  the  l^inited  *ime                          ^  ^^^  ^^^g. 
tigation,to  de^mnne  J-ra^ly  ^e  -1^^^^^^  ^^^^  ^ 

.       Sr^iir^S^bel'^se'S  inflations  gr<;wing  out  of  amalgamations, 

reorganizations,  etc.  presented  in  Chapter  V. 

The  data  regarding  costs  and  P^^^*^^^^^    ^,  -^  conclusions  re- 

Sx:pp.t  ...  --- V;;^^\"n  pXrs  ft  was  necessary  for  the 
garding  the  causes  of  f^^J^^^^^  taken  place  in  the  relation 

Commission  to  ascertain  ^^^^.^^^^f  %. .     p^^  this  investigation  of 
of  supply  to  demand  during  the  year  191b.    i?  ori;m 


INTRODUCTION. 


19 


economic  causes  production,  shipment,  and  inventory  figures  were 
obtained  from  the  manufacturers  for  the  years  1913  to  1916,  in- 
clusive. Inventory  figures  were  also  obtained  from  jobbers,  'xhe 
publishers  of  daily  papers  were  asked  to  furnish  figures  showing  the 
receipts  of  paper  and  inventories  for  different  dates,  and  most  of 
them  furnished  such  figures  as  they  could.  Circulation  figures  were 
^  obtained  from  the  sworn  returns  of  publishers  to  the  Post  Office  De- 
partment and  statistics  of  advertising  were  obtained  for  the  prin- 
cipal newspapers  in  several  of  the  largest  cities. 

The  information  collected  by  the  Commission  relative  to  the  supply 
and  demand  factors  is  presented  in  Chapter  VI. 

Activities  op  manufacturers  and  jobbers.— For  the  investigation 
of  alleged  unfair  or  illegal  activities  of  manufacturers  and  jobbers 
the  Commission's  agents  not  only  examined  the  contracts  of  all  of  the 
principal  manufacturers,  selling  agencies,  and  jobbers,  but  also  the 
correspondence  files  of  the  News-Print  Manufacturers  Association 
and  some  of  the  more  important  members.  Publishers  also  furnished 
a  considerable  amount  of  valuable  information  relative  to  this 
matter. 

The  findings  of  the  Commission  regarding  this  phase  of  the  inves- 
tigation are  presented  in  Chapter  VII. 

Conclusions  and  recommendations.— The  conclusions  of  the  Com- 
mission were  contained  in  its  preliminary  report  to  the  Senate  dated 
March  3,  1917,  and  are  repeated  in  Chapter  VIII  of  this  report. 
The  Commission's  recommendations  for  the  protection  of  publishers 
during  the  continuance  of  the  present  abnormal  conditions  resulting 
from  the  war  are  contained  in  the  letter  of  submittal  above  and 
also  in  Chapter  VIII. 

Section  6.  Efforts  for  immediate  relief  of  publishers. 

An  important  fact  brought  out  by  the  news-print  paper  investiga- 
tion was  that  most  of  the  output  of  low-cost  mills  was  sold  under 
annual  contracts  to  the  large  publishers  of  the  country,  while  many 
of  the  2,000  small  dailies  and  some  14,000  weeklies  depended  on  the 
open  market  or  on  high-cost  mills  for  their  supplies  of  news  print. 
In  the  latter  part  of  1916  these  smaller  papers  in  many  cases  had  ex- 
treme difficulty  in  obtaining  a  supply  of  paper  except  at  prices  which, 
if  maintained,  would  have  driven  them  out  of  business. 

The  public  hearing  of  the  Commission  on  December  12, 1916,  made 
this  situation  so  clear  that  at  the  opening  of  the  afternoon  session, 
the  manufacturers  through  their  attorney  requested  suggestions  from' 
the  Commission  as  to  some  method  of  distributing  their  available 
product  that  would  take  care  of  the  small  publishers.  The  willing- 
ness of  the  associations  of  small  publishers  to  forward  some  such 
,  scheme  of  distribution  was  at  once  made  evident.    At  the  same  time 


F-  -     ?N  1^    1      "f" 


^« 


* 


20 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


their  representative  said  "  We  do  not  believe  we  can  get  this  help  or 
this  assistance  unless  it  be  through  the  cooperation  of  the  Federal 
Trade  Commission  as  a  mediary  in  this  particular  emergency." 

In  accordance  with  its  established  policy  in  cases  where  its  as- 
sistance is  requested  in  cooperative  efforts  of  business  men  to  im- 
prove competitive  conditions,  the  Commission  in  pursuance  of  the 
above  suggestion  arranged  for  conferences  of  committees  represent- 
ing publishers,  manufacturers  and  jobbers.  As  a  result  of  these 
conferences  the  Commission  at  the  close  of  the  year  instituted  a 
thorough  canvass,  which  revealed  very  completely  the  immediate 
needs  of  newspaper  publishers  without  contracts.  The  manufac- 
turers and  large  publishers,  however,  were  unable  to  come  to  any 
agreement  through  which  a  supply  of  paper  could  be  secured  for 
distribution  to  small  publishers  under  the  supervision  of  the  Com- 
mission. As  the  Commission  had  no  legal  powers  through  which 
the  necessary  paper  could  be  obtained  it  was  compelled  to  abandon 
this  effort  to  furnish  immediate  relief. 

On  January  26, 1917,  a  conference  between  manufacturers  and  pub- 
lishers was  held  in  Chicago  at  which  the  suggestion  was  made  that 
the  Federal  Trade  Commission  should  arbitrate  the  question  of  what 
was  a  fair  and  reasonable  price  for  the  sale  of  news-print  paper. 
Adopting  this  suggestion,  several  manufacturers  in  February,  re- 
quested the  Commission  to  determine  what  was  a  fair  price  for  stand- 
ard news  for  the  six-month  period  beginning  March  1,  1917,  and 
agreed  to  abide  by  its  decision.  After  conferences  with  publishers 
and  jobbers  the  Commission  decided  to  undertake  this  task,  and  on 
March  4,  1917,  announced  the  prices  which  it  had  determined  in  a 
report  to  the  Senate  of  the  United  States.*  Subsequent  to  this  an- 
nouncement, various  complications  arose  which  caused  the  plan  to 
fail.  The  details  of  these  later  developments  are  given  in  Chapter 
VIII.     (See  p.  140.) 

A  Senate  Doc.  No.  3,  65tli  Coi%-.,  special  session. 


CHAPTER  n. 

GENERAL  DESCRIPTION  OF  THE  NEWS-PRINT  PAPER  INDUSTRY. 

Section  1.  Introduction. 

There  are  some  2,500  daily  and  Sunday  and  about  14,000  weekly 
and  semiweekly  newspapers  in  the  United  States.  The  daily  papers, 
according  to  Census  data  for  1914,  had  a  circulation  of  about  30,000,- 
000  copies,  the  Sunday  papers  about  17,000,000,  and  the  weeklies  and 
semiweeklies  about  24,000,000.  These  newspapers  range  from  the 
largest  metropolitan  daily,  with  an  average  circulation  for  the  six 
months  ending  October  1, 1916,  of  more  than  800,000  copies  per  day, 
to  the  smallest  country  weekly,  with  a  circulation  of  a  few  hundred 
copies  each  week.  These  dailies  and  weeklies  together  furnish  the 
cheapest  and  most  serviceable  means  of  disseminating  information, 
general  and  local,  to  the  100,000,000  people  in  this  country.  Practi- 
cally every  town  of  any  size  in  the  country  has  at  least  one  publica- 
tion devoted  especially  to  local  affairs.  For  this  reason  the  great 
reading  public  has  a  special  interest  in  whatever  affects  the  welfare 
of  these  publications. 

Daily  newspapers.— The  2,500  daily  newspapers,  nearly  600  of 
which  have  Sunday  editions,  have  nearly  60  per  cent  of  the  total 
circulation  of  all  newspapers  and  consume  the  great  bulk  of  the  news- 
print paper  produced  and  imported.^  There  are  119  daily  news- 
papers in  32  of  the  50  cities  having  100,000  population  or  over,  which 
have  an  average  daily  circulation  in  excess  of  50,000,  according  to 
sworn  statements  to  the  Post  Office  Department  for  the  six-month 
period  ending  October  1,  1916.  These  119  dailies  have  a  total  circu- 
lation  of  15,649,634  copies.  The  following  tabulation  groups  them 
according  to  circulation : 


Group. 

Number  cf 
publications. 

Combined 
circulation. 

400,000  and  over 

6 
6 

9 
35 
64 

300,000-400,000 

2,914,fi26 

200,000-300,000. 

1,887,568 

100,000-200,000. 

1,979,432 

50,000-100,000. 

4,431,209 

4,436,739 

TOUI 

119 

15,649,634 

» More  than  1,000  daUy  newspapers  also  have  weekly  or  semiweekly  editions. 


i 


1   i 


1     i. 


(? 


22  EEPOBT  ON    NEWS-PRINT  PAVEB  INDUSTET. 

These  119  daily  newspapers  represent  about  50  per  cent  of  the 
total  cTrculation  of  dailies.  There  are  430  other  newspapers  in  the 
Std  S^ai  having  an  average  daily  f^^^^f^^^^ZTZZ 
whose  combined  circulation  is  estimated  at  ^'^OO'^J'^f  ^^ 
1,900  dailies  having  less  than  10,000  circulation  with  an  estimated 

t^tal  of  9,000,000.  .  ^ 

One  hundred  of  the  daily  newspapers  in  the  United  States  or  4 

n«r  cent  are  published  in  the  two  cities  of  New  York  and  Chicago 

Td  hav;  a  LSlned  circulation  of  nearly  6,500,000,  or  about  20  per 

*^\alSiraU  of  the  daily  papers  use  roll  news,  most  of  which 

^^^LtxT™iKS.-The  14,000  weekly  and  -i-ekly  -w. 
papers  use  sheet  news  largely  and  purchase  i    in  the  open  mM 
On  account  of  the  large  expense  necessary  to  *e  gathering  of  news 
and  miscellaneous  matter  for  the  make-up  and  printing  of  such  papere, 
abourrOOO  of  the  smaller  weekly  newspapers  make  use  of  what  is 
Sown  i  "ready  print  service."     They  buy  t^-  paper  a^^ady 
printed  on  one  side  or  on  two  or  more  pages,  and  pnnt  the  rwt  of 
the  paper  themselves,  using  local  news  items     m  addition  to  th^ 
Z  r.^r,t  «>rvice  manv  of  them  use  what  is  known  as     plate 
::^tce'CLris  news  matter  furnished  in  the  form  of  metal  type 
prteTcast  in  column  lengths  which  may  be  cut  up  and  arranged  at 

^^Thet  at^veStncerns  which  make  a  business  of  furnishing 
Jdy  prSTorplate  services  to  publishers.  The  most  ™Port«nt  ^f 
Zi  arHhe  Western  Newspaper  Union,  Omaha  Nebr.;  the  Amen- 
irPrllssociation,  New  York  City;  and  the  American  Type 
Founded  Co.,  Jersey'city,  N.  J.  Other  i^-J-t  ones  are  th^ 
Pnblishers  Press  Association,  Toledo,  Ohio;  United  Weekly  Press 

2SSn,  "Grand  Kapids,  Mich.;  ^^f  .^^ff:^^^:^^SZ 
Co  Chicago  The  Western  Newspaper  Union  has  30  branch  ottices 
Sited  iTas  many  cities  of  the  United  States,  extending  from  Boston 
tToSv^r  and  Minneapolis  to  Houston.  It  suppli^  more  than  90 
L^Tof  the  papers  using  ready  print  and  in  addition  furnish^ 
WeTuanti  ii  of  plate  service  to  other  publishers.  At  each  of  ite 
large  quanxi  f  .  ^j      „|  ^g^kly  newspapers,  trade  ]our- 

rn^SST  for  other  publishers.  At  the  Chicago  office  alone 
"Si72rsucTpubl  cations  a^re  printed.  In  addition  to  being  the 
tit  Snsumer^f  sheet  news  print  in  the  United  States  it  is  also 
l^Tmportant  factor  as  a  paper  jobber,  carrying  stocks  o^  pn« 
paper  at  nine  of  its  branch  offices  and  doing  some  jobbing  busmess 
fn Tee  news  at  each  of  its  other  branches.  The  Pbbing^siness  at 
Smaha  is  conducted  under  the  trade  name  of  Western  Paper  Co. 


GENERAL  DESCBIPTION  OF  NEWS-PEINT  PAPER  INDUSTRY.  23 

Section  2.  Development  of  the  news-print  industry. 

The  manufacture  of  paper  from  wood  pulp  dates  back  to  the 
sixties,  when  the  first  machine  for  grinding  wood  was  installed  in  this 
country.  Prior  to  this  time  the  paper  used  for  printing  newspapers 
was  made  of  rags,  straw,  and  other  vegetable  fibers.  Poplar  was 
the  first  wood  used  for  making  pulp,  and  then  spruce.  The  latter 
has  been  found  the  most  satisfactory  of  all  of  the  woods  for  making 
news  print  and  is  at  present  the  most  extensively  used. 

With  the  use  of  wood  pulp  for  making  news  print  there  came  a 
rapid  development  in  the  industry.  The  estimated  daily  capacity 
of  domestic  news-print  mills  increased  from  about  400  tons  in  1880 
to  about  4,700  tons  in  1916.  According  to  the  United  States  Census 
reports,  the  quantity  manufactured  in  domestic  mills  since  1899  and 
the  value  of  the  product  has  been  as  follows : 


Year. 

Tons  pro- 
duced. 

Value  ©f 
product. 

Year. 

Tons  pro- 
duced. 

Value  of 
product. 

1899 

569,212 
912,822 

$20,091,874 
35,906,460 

1909 

1,175,554 
'1,313,284 

$46,855,560 
52,942,774 

1904 

1W4 

» This  figure  includes  about  30,000  tons  of  paper  not  classed  by  manufacturers  as  news  print.    The  Com- 
mission's production  figure  for  1914  was  1,282,934  tons. 

The  production  of  news-print  paper  in  the  calendar  year  1916,  De- 
cember being  estimated,  was  1,355,196  tons. 

Rank  of  industry. — ^The  United  States  Census  reports  for  1914  rank 
the  paper  and  wood-pulp  industry  of  the  country  as  twentieth  in  total 
value  of  products.  News-print  paper  constituted  about  one- fourth  of 
the  total  paper  tonnage  shown,  and  somewhat  less  than  one-sixth  of 
the  total  value.  Other  important  grades  of  paper  manufactured  are 
book,  writing,  wrapping,  tissue,  kraft,  bag,  etc.  The  total  production 
of  the  45  United  States  companies  making  news-print  paper  in  1916 
was  found  by  the  Commission  to  be  1,355,196  tons,  valued  at  more 
than  $50,000,000.  Of  this  paper  about  75,000  tons  were  exported  and 
most  of  the  remainder  was  used  by  newspapers.  In  addition,  they 
also  used  nearly  468,000  tons  of  Canadian  paper,  which  was  about  75 
per  cent  of  the  total  production  of  that  country.  The  commercial 
uses  of  news-print  paper  are  largely  for  catalogues,  telephone  direc- 
tories, railway  guides,  school  tablets,  handbills,  wrapping  paper,  etc. 

Period  prior  to  i9io. — ^In  the  decade  prior  to  1900  the  rapid 
building  of  paper  mills  led  to  overproduction  and  a  decline  in 
prices.  In  1898  the  International  Paper  Co.  was  organized.  It 
absorbed  most  of  the  mills  east  of  the  Mississippi  River,  with  the 
control  of  from  two-thirds  to  three-quarters  of  the  domestic  output. 
For  two  or  three  years  after  the  organization  of  this  combination 


24 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


prices  were  firmer,  but  new  mills  were  being  built,  and  by  1901 
prices  again  began  a  downward  movement,  which  reached  the  lowest 
point  in  1906.  The  net  earnings  of  the  International  Paper  Co. 
fell  from  $3,961,657  in  the  year  ending  June  30,  1901,  to  $1,623,616 
in  1906-7.  A  representative  of  the  company  testified  that  the  aver- 
age gross  receipts  per  ton  on  its  sales  had  fallen  from  $42.52  in 
1901  to  $39.90  in  1906.  The  following  year  the  average  receipts  per 
ton  advanced  to  $41. 

In  the  latter  part  of  1907  and  early  in  1908  a  great  effort  was  made 
to  advance  prices  further.  It  was  to  some  extent  successful,  and  the 
increase  in  the  cost  to  some  newspapers  was  very  considerable.  This 
resulted  in  the  appointment  of  a  committee  of  the  House  of  Rep- 
resentatives, which,  after  a  very  full  investigation  beginning  in  the 
spring  of  1908,  made  its  final  report  to  Congress  in  February,  1909. 
This  report  emphasized  the  scarcity  of  spruce  in  the  United  States 
and  the  need  for  its  conservation.  It  recommended  that  ground 
wood  should  be  admitted  free  from  territory  in  which  there  was  no 
restriction  on  exports  and  that  the  duty  on  news  print  be  reduced 
to  one-tenth  cent  per  pound.  On  this  point  the  report  reads  as 
follows : 

It  can  not  be  expected  that  Canada  or  its  Provinces  will  re- 
move the  present  discriminations  as  to  the  exportation  of  pulp 
wood  to  the  United  States  or  cease  from  adding  additional 
discriminations  unless  we  also  lessen  the  tariff  on  the  cheap 
paper,  which  is  made  mainly  from  spruce  wood. 

The  committee  held  that  the  duty  of  $2  per  ton  recommended  by 
it  would  offset  the  high  cost  of  production  in  the  United  States. 

Period  subsequent  to  191o. — Since  1910,  although  prices  remained 
above  the  1906  level,  the  news-print  industry  in  the  United  States 
has  barely  held  its  own,  only  one  large  mill  having  been  built. 
On  the  other  hand,  several  mills  have  been  changing  machines  over 
from  news  print  to  other  grades,  especially  since  1913,  the  aggre- 
gate loss  to  news-print  production  since  1910  probably  amounting 
to  500  tons  a  day.  As  a  result  there  was  a  decline  in  the  output 
in  1914  and  1915,  and  prices  also  showed  a  downward  trend.  (See 
pp.  61  to  68.) 

In  1916  some  revival  occurred  in  the  development  of  the  domestic 
industry.  Prices  rose  and  production  increased  more  than  100,000 
tons  over  the  preceding  year.  Before  the  close  of  1916  the  Inter- 
national Paper  Co.  completed  the  installation  of  two  new  machines 
with  a  combined  capacity  of  about  62  tons  per  24-hour  day,  and 
three  additional  machines  with  a  combined  daily  capacity  of  140 
tons  began  operations  in  other  mills  during  the  first  half  of  1917. 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY.  25 

In  marked  contrast  with  the  stationary  condition  of  the  news- 
print industry  in  the  United  States  during  the  last  five  years  has 
been  the  phenomenal  development  of  the  industry  in  Canada.  Be- 
tween 1910  and  1916  six  new  mills  operating  10  machines  were  built, 
with  an  estimated  daily  capacity  of  more  than  500  tons.  This  in- 
creased output  of  news  print  was  largely  exported  to  the  United 
States.  One  new  machine  with  a  daily  capacity  of  50  tons  began 
operation  in  November,  1916,  and  several  new  developments  are 
under  way  which  will  begin  operations  in  1917  and  1918. 

According  to  a  report  of  the  American  Newspaper  Publishers 
Association  of  March  24,  1917,  the  new  tonnage  expected  in  the 
United  States  and  Canada  during  1917  and  1918  is  as  follows: 

New  tonnage,  1917  (revised  Mar.  22)  :  Tons  per  day. 

Hawley  Pulp  &  Paper  Co.,  now  running 50 

Great  Northern  Paper  Co.,  now  running 50 

Spanish  River  Pulp  &  Paper  Mills- 
New  running gg 

November . qq 

St.  Maurice  Paper  Co. — 

Now  running 5Q 

April """""  5Q 

Pacific  Mills  (Ltd.)— 

July 6Q 

October qq 

Price  Bros.  &  Co.-^ 

November ^5 

May ^ """I  50 

Northwest  Paper  C3o.,  April 59 

Brompton  Pulp  &  Paper  Co.,  December 50 

Ontario  Paper  Co. — 

Now  running 5Q 

November 5Q 

Abitibi  Power  &  Paper  Co.,  December 175 

Mill  organizing,  December 59 

945 

Tonnage  for  1918  (revised  Mar.  22) : 

BSfturentide  (3o.  (Ltd.),  Grand  Mere,  Province  of  Quebec,  November__  200 

Price  Bros.  &  Co.,  Kenogami,  Province  of  Quebec,  November 175 

Lake  Winnipeg  Paper  Co.,  November 2(X) 

Mill  organizing,  November 2OO 

775 

Future  tonnage  (uncertain  as  to  time  and  quantity) :  ~ 

International  Paper  Co.,  Three  Rivers,  Province  of  Quebec 200 

Pic  River  and  Nipigon  Power 150 

Kenora,  Ontario  (E.  W.  Backus) 2OO 

550 


i  J 


MM 


0. 


l!i; 


26 


REPORT   ON   NEWS-PRINT  PAPER  INDUSTRY. 


The  St.  Maurice  Paper  Co.  at  Three  Rivers,  Quebec,  is  a  subsidiary 
of  the  Union  Bag  &  Paper  Co.  The  Pacific  Mills  (Ltd.),  at  Ocean 
Falls,  British  Columbia,  is  a  subsidiary  of  the  Crown  Willamette 
Paper  Co. 

There  is  some  doubt  whether  the  mills  reported  as  beginning  op- 
erations in  November  and  December,  1917,  will  be  completed  by 
that  time.    They  represent  a  daily  capacity  of  440  tons. 

Section  3.  Process  of  production. 

The  basic  material  in  the  manufacture  of  paper  is  cellulose,  which 
is  obtained  in  the  form  of  plant  fibers.  In  the  case  of  news-print 
paper  the  fibrous  material  is  obtained  from  certain  kinds  of  wood. 
Spruce  is  most  generally  utilized,  though  hemlock,  balsam  fir,  and 
other  kinds  are  used  in  some  cases.  The  wood  is  cut  usually  in 
winter  and  transported  to  the  mill,  when  practicable,  by  floating  the 
logs  down  a  stream.  Shipment  to  the  mill  by  rail  and  water  also 
is  employed  extensively.* 

The  first  step  in  the  process  after  the  logs  have  arrived  at  the 
mill  is  that  of  removing  the  bark  if  this  has  not  already  been  done. 
This  is  accomplished  by  one  of  two  types  of  machines.  The  first 
type  is  called  the  tumbler,  which  consists  of  a  large  cylindrical  drum. 
Into  this  drum  the  logs,  in  2-foot  lengths,  together  with  a  suitable 
quantity  of  water,  are  introduced.  The  drum  is  then  caused  to  re- 
volve, and  the  friction  of  the  logs  against  the  side  of  the  dnun  and 
against  one  another  removes  the  bark.  The  second  type  is  called 
a  barker,  or  rosser,  and  consists  of  a  heavy  iron  disk,  provided  usu- 
ally with  three  knives  fixed  to  its  surface  and  projecting  about  half 
an  inch  from  it.  The  disk  is  rotated  rapidly  and  when  the  logs  are 
pressed  against  its  surface  the  bark  is  shaved  oflF  by  the  knives. 

The  second  is  the  more  thorough  method  but  is  less  economical, 
because  of  the  loss  of  the  wood  which  is  cut  awav.  Sometimes  the 
logs  are  barked  before  they  are  shipped  to  the  mill  in  order  to  save 
freight. 

After  being  barked  the  pieces  of  wood  are  converted  either  into 
"  mechanical "  pulp  or  into  "  chemical "  pulp.  The  former  is.  not 
suitable  alone  for  paper  making  because  it  contains  only  about  55 
per  cent  of  cellulose  and  the  fibers  are  too  short  and  stiff  to  felt 
or  interlace  together  properly;  hence  it  is  mixed  with  a  certain 
quantity  of  chemical  pulp  which  is  pure  cellulose  with  fibers  of 
greater  length. 

Mechanical  pulp. — Mechanical  pulp  or  ground  wood  is  produced 
by  applying  the  pieces  of  wood  by  hydraulic  pressure  to  the  face  of 
a  large  grindstone,  usually  about  54  inches  in  diameter  and  27  inches 


1  For  a  description  of  the  process  of  the  production  of  paper,  see  the  Pulp  and  Paper 
Magaalne,  Jan.  4,  1917,  pp.  11-28. 


GENERAL  DESCRIPTION  OF  NEV7S-PRINT  PAPER  INDUSTRY.         27 

thick.  This  grindstone  rotates  at  a  high  rate  of  speed  within  a  cas- 
ing, which  is  provided  with  pockets  into  which  the  pieces  of  wood 
are  introduced  and  pressed  against  the  stone.  If  sufficient  water  is 
introduced  into  the  pit  of  the  grinder  the  temperature  can  be  kept 
about  at  normal,  but  the  usual  practice  in  this  country  is  to  limit  the 
quantity  of  water  admitted,  so  that  the  friction  brings  about  high 
temperatures.  Experiments  are  reported  to  have  been  successfully 
carried  out  with  the  lengthwise  grinding  of  logs  in  order  to  obtain  a 
longer  fiber  in  the  ground  wood.  An  important  improvement  in 
ground  wood  equipment  is  the  magazine  grinder  now  in  use  in  one 
mill  in  the  United  States  and  one  in  Canada.  This  grinder  feeds  the 
wood  in  automatically  from  above  and  not  only  economizes  in  floor 
space  but  also  in  labor  costs.  The  wood  grinders  are  operated  almost 
exclusively  by  water  power,  the  grindstones  frequently  being  at- 
tached directly  to  the  turbine  shaft.  In  other  cases  they  are  pro- 
pelled by  electricity. 

The  ground  wood  comes  from  the  grinders  in  the  form  of  slush, 
which  is  then  screened  in  order  to  remove  the  coarser  particles.  In 
the  older  mills  this  screening  is  done  in  small  troughs  with  fine 
screen  plates  in  the  bottom.  Rotary  screening  is  now  coming  into 
general  use.  The  slush  is  run  into  a  revolving  cylinder  with  screen 
plates  in  its  surface.  The  centrifugal  force  throws  the  finer  parti- 
cles of  slush  through  these  screens.  One  great  advantage  of  this  sys- 
tem is  that  the  installation  requires  much  less  room  than  the  older 
one. 

After  the  slush  has  been  screened  it  is  ready  to  be  used  for  paper 
making.  Where  the  ground  wood  mill  is  a  part  of  the  paper  mill  or 
not  too  far  distant  from  the  paper  mill  the  ground  wood  slush  is 
piped  in  without  converting  into  pulp.  Where  it  is  necessary  to  ship 
the  ground  wood  by  rail  it  is  compressed  until  from  30  to  50  per 
cent  of  the  water  is  squeezed  out. 

Chemical  pulp. — Spruce  wood,  in  addition  to  cellulose,  contains  a 
considerable  amount  of  nonfibrous  material,  which  is  dissolved  and 
separated  from  the  cellulose  by  cooking  the  wood  under  pressure  with 
a  solution  of  bisulphite  of  lime.  This  is  known  as  the  sulphite  proc- 
ess. The  wood  is  first  chipped  up  into  small  pieces  by  a  machine 
which  consists  of  a  massive  iron  or  steel  disk  about  84  inches  in 
diameter  with  two  or  three  steel  knives  projecting  from  the  surface 
of  this  disk  and  radiating  from  the  center.  This  disk  is  caused  to 
revolve  rapidly,  and  the  logs  are  applied  to  the  surface  of  the  disk, 
usually  at  an  angle  of  45°.  The  knives  then  chip  off  flakes  of  wood 
from  the  end  of  the  log  at  that  angle. 

There  are  two  methods  of  preparing  bisulphite  of  lime  for  use  in 
the  sulphite  process,  designated,  respectively,  the  "tower"  system 
and  the  "  tank  "  system.    In  the  tower  system,  which  is  in  most  gen- 


mm 


..  „  II  mtm» 


H 


I 

I 

I 


Hfcr 


28 


REPORT  ON    NEWS-PRINT  PAPER   INDUSTRY. 


eral  use,  sulphur  is  burned  in  specially  constructed  ovens  with  a 
limited  amount  of  air  so  as  to  form  sulphur  dioxide  gas.  This  is 
run  out  through  pipes,  which  enter  into  a  tank  of  water  to  cool  the 
gas  and  then  into  tall  towers,  usually  of  wood,  with  a  lining  of  lead. 
These  towers  may  be  considerably  over  100  feet  in  height  and  from  6 
to  10  or  more  feet  in  diameter.  The  towers  are  filled  with  blocks  of 
limestone,  and  a  continuous  stream  of  water  is  introduced  from  the 
top  of  the  tower.  As  the  gas  passes  upward  through  the  limestone  it 
enters  into  combination  with  the  water  and  lime,  so  that  the  liquid 
flowing  out  at  the  bottom  of  the  tower  is  a  solution  of  bisulphite  of 
lime. 

In  the  tank  system,  otherwise  called  the  "  milk-of-lime "  system, 
water  and  lime  are  mixed  in  a  large  vat,  and  the  sulphur-dioxide  gas 
IS  forced  into  the  mixture  to  form  bisulphite  of  lime.  The  process 
varies  in  detail,  of  course,  from  plant  to  plant.  An  amount  of  sul- 
phur approximating  from  300  to  350  pounds  is  required  in  the  pro- 
duction of  a  ton  of  air-dry  pulp. 

The  chemical  process  of  making  sulphite  is  conducted  in  large 
boilers,  commonly  called  "digesters."  These  may  be  of  varying 
type,  but  the  one  in  almost  universal  use  is  a  tall  cylindrical  vessel, 
sometimes  bein^  of  sufficient  size  to  produce  from  11  to  16 J  net 
tons  of  pulp.  The  digesters  are  constructed  of  boiler  plate  and  are 
lined  with  acid-resisting  brick  or  tile  set  in  acid-proof  mortar.  This, 
of  course,  is  to  prevent  the  acid  developed  in  the  process  from  corrod- 
ing the  metal  of  which  the  digester  is  constructed,  but  has  also  the 
further  advantage  of  effecting  a  considerable  saving  in  steam,  because 
of  the  fact  that  this  lining  acts  as  a  heat  insulator.  The  digesters 
taper  to  a  cone  at  the  top  and  bottom  ends. 

The  process  of  cooking  varies  considerably  in  different  plants.  In 
general,  after  the  chips  of  wood  and  the  bisulphite  of  lime  have  been 
introduced,  the  manhole  is  closed,  and  steam  is  gradually  forced  in 
at  the  bottom.  This  is  continued  until  the  steam  pressure  reaches 
about  80  pounds  and  the  temperature  about  365°.^  The  process  of 
cooking  is  continued  about  eight  hours.  At  the  end  of  the  cooking 
process  the  outlet  at  the  bottom  of  the  digester  is  opened,  and  the 
steam  pressure  quickly  forces  the  material  out  into  a  large  bin  with  a 
screen  bottom,  through  which  the  liquid  drains  off.  At  this  point  the 
pulp  usually  is  washed  for  about  three  hours  by  means  of  water  de- 
livered at  the  top  of  the  bin.  The  ligneous  and  resinous  portions  of 
the  wood,  being  in  solution,  to  great  extent  are  washed  away.  Spruce- 
wood  pulp  obtained  in  this  manner  contains  about  88  per  cent  of 
cellulose,  while  imtreated  spruce  wood  contains  only  about  55  per 
cent. 

>Dept  of  Com.,  Bur.  of  For.  4  Dom.  Com.,  Special  Agents  Series,  No.  110,  p.  47. 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY. 


29 


Following  this  the  chemical  pulp  is  screened  to  remove  coarse 
fibers,  knots,  slivers,  and  the  like,  in  much  the  same  manner  as  the 
mechanical  pulp. 

Paper  making. — The  paper-making  process  proper  begins  in  the 
"beaters,"  where  the  various  component  substances  of  the  finished 
product  are  mixed. 

The  beaters  are  large  receptacles  of  various  types,  the  important 
common  characteristic  of  which  is  a  cylindrical  roll  fitted  with  steel 
or  bronze  blades,  which  revolves  over  a  stationary  concave  bedplate 
equipped  with  similar  blades.  The  pulp  is  caused  to  circulate  in 
the  vat  so  that  all  of  it  will  pass  under  this  roll  about  an  equal 
number  of  times.  At  the  beginning  of  the  operation  the  roll  is  raised 
slightly  above  the  bedplate  and  then  gradually  lowered  as  the  opera- 
tion is  continued,  until  the  fibers  have  been  sufficiently  torn  apart, 
and  the  various  ingredients  have  been  thoroughly  mixed. 

In  the  case  of  news-print  paper  the  proportion  of  mechanical  to 
chemical  pulp  varies  according  to  the  quality  of  the  paper  desired,  type 
of  machines,  etc.  On  the  average  about  80  per  cent  of  mechanical 
pulp  is  mixed  with  about  20  per  cent  of  chemical  pulp.  Various 
other  ingredients  are  also  introduced,  such  as  talc  or  china  clay 
which  is  used  as  a  filler  to  render  the  paper  more  opaque,  and  to  give 
it  a  smoother  surface,  and  liquid  rosin,  which  is  used  to  "size"  the 
paper  so  that  the  printing  ink  will  not  be  absorbed  and  thus  cause 
the  impressions  to  become  blurred.  Red  and  blue  aniline  dyes  are 
added,  when  obtainable,  to  make  the  paper  white.  Alum  is  also 
added  to  precipitate  the  rosin  and  the  coloring  matter  upon  the  fibers. 

Owing  to  the  greater  cost  of  sulphite  ordinarily  only  a  sufficient 
quantity  is  used  to  give  the  news  print  such  tensile  strength  that  it 
will  run  through  the  paper  machines  and  the  printing  presses  without 
breaking. 

In  some  plants  the  beating  process  is  shortened  somewhat  by  the 
use  of  the  so-called  Jordan  refining  engine.  This  machine  consists 
of  a  hollow  cone  equipped  on  its  interior  surface  with  blades  and 
another  smaller  cone  with  blades  on  its  exterior  surface.  The 
smaller  cone  revolves  within  the  larger  one,  and  the  pulp  is  reduced 
to  the  desired  consistency  by  the  action  of  the  blades  against  each 
other. 

After  the  beating  process  has  been  completed  the  pulp,  very  much 
diluted  with  water,  is  run  into  a  so-called  stuff  chest,  in  which  it  is 
kept  in  constant  motion  to  prevent  the  pulp  from  settling  to  the 
bottom.  From  this  chest  the  pulp  or  slush  passes  through  a  strainer 
and  into  a  long  narrow  box  placed  at  the  head  of,  and  across  the  full 
width  of,  the  paper  machine.    Thence  it  overflows  onto  a  wire-screen 


!     i 


30 


REPORT  ON    NEWS-PBINT  PAPER  INDUSTRY. 


belt  consisting  of  fine  copper  wires,  woven  with  60  or  70  meshes  to 
the  inch.  The  length  of  this  screen  is  often  75  feet  and  the  width 
150  or  more  inches.  This  belt  moves  forward  on  a  series  of  3-inch 
rolls,  and  also  has  a  lateral  shaking  motion.  The  pulp  settles  down 
upon  this  screen  in  the  form  of  a  wet  sheet,  much  of  the  water 
draining  through  the  mesh  of  the  screen.  Toward  the  farther  end 
of  the  screen  it  passes  over  several  vacuum  boxes,  which  cause  still 
more  moisture  to  be  sucked  out  through  the  screen.  The  speed  at 
which  the  screen  is  run  is  as  high  in  some  cases  as  680  feet  per 
minute. 

When  the  slush  is  run  onto  the  wire  screen  difficulty  is  caused  by 
reason  of  the  fact  that  the  speed  of  the  slush  is  less  than  that  of  the 
screen.  This  has  a  tendency  to  cause  ripples  in  the  sheet  to  be 
formed.  This  difficulty  has  been  obviated  for  the  most  part  by 
the  use  of  a  new  principle  of  operation  known  as  the  Eibel  process, 
patented  in  1907,  in  accordance  with  which  the  screen  is  inclined, 
so  that  the  sheet  is  carried  in  a  downhill  direction.  The  action  of 
the  force  of  gravity  thus  causes  the  sheet  to  maintain  the  same  speed 
as  the  screen,  and  the  screen  merely  supports  the  sheet. 

At  the  end  of  the  screen  the  sheet  passes  between  two  rolls  called 
the  couch  rolls,  the  upper  one  of  which  is  covered  with  a  felt 
jacket.  From  the  screen  belt  the  sheet  runs  onto  a  woolen  belt. 
Thence  it  passes  between  a  series  of  so-called  press  rolls,  the  purpose 
of  which  is  to  squeeze  out  further  quantities  of  water.  Finally,  the 
sheet  is  run  over  several  large  hollow  cast-iron  cylinders  3  or  4  feet 
in  diameter,  heated  internally  by  steam.  These  rolls  dry  the  paper 
thoroughly.  The  sheet  then  passes  through  the  calendar  rolls,  which 
polish  the  surface,  and  is  wound  upon  a  roll.  The  rolls  of  paper 
later  are  removed  and  rewound  upon  cores,  the  paper  being  trimmed 
and  cut  to  the  proper  width  at  the  same  time.  They  are  then  re- 
moved to  the  finishing  room,  where  they  are  wound  with  heavy  wrap- 
ping paper  to  protect  them  in  shipment.* 

Section  4.  Domestic  and  Canadian  companies. 

There  were  on  January  1,  1916,  about  45  companies  in  the  United 
States  engaged  in  the  manufacture  of  news-print  paper,  which  to- 
gether operated  63  mills,  and  15  companies  in  Canada,  which  to- 
gether operated  17  mills.  Ten  of  the  United  States  companies  did 
not  have  sulphite  plants  and  four  did  not  have  either  sulphite  or 
ground-wood  plants.  All  of  the  Canadian  companies  but  one  had 
Uound-wood  mills,  but  four  did  not  have  sulphite  plants. 

*  For  a  description  of  the  parts  of  a  paper  machine,  see  Paper,  Apr.  26,  1916,  pp.  1^-16. 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY. 


31 


The  International  Paper  Co.,  which  is  the  largest  manufacturer  in 
the  United  States,  has  9  mills  which  are  operated  almost  entirely  on 
news  print  and  2  or  3  mixed  mills,  making  other  grades  as  well  as 
news.  These  mills  are  located  in  Maine,  New  Hampshire,  Vermont, 
Massachusetts,  and  New  York. 

The  Great  Northern  Paper  Co.,  which  is  the  next  largest  manu- 
facturer in  the  United  States,  has  2  news-print  mills  located  at  Mil- 
linocket  and  East  Millinocket,  Me.,  and  1  mixed  mill,  which  makes 
some  news,  located  at  Madison,  Me. 

The  Minnesota  &  Ontario  Power  Co.  operates  a  large  mill  at  Inter- 
national Falls,  Minn.,  and  controls  the  P^'ort  Frances  Pulp  &  Paper 
Co.  (Ltd.),  in  western  Ontario,  Canada.  The  Crown  Willamette 
Paper  Co.  operates  2  mills  located  at  West  Linn,  Oreg.,  and  Camas, 
Wash.,  and  also  controls  the  Pacific  Mills  Co:  (Ltd.),  which  has  a 
new  mill  about  ready  to  begin  operations  at  Ocean  Falls,  British 
Columbia. 

These  four  large  companies  in  1916  produced  about  55  per  cent  of 
the  total  domestic  output. 

The  largest  Canadian  manufacturer  is  the  Spanish  River  Pulp  & 
Paper  Mills  (Ltd.),  which  controls  the  Lake  Superior  Paper  Co. 
(Ltd.).  The  combined  companies  have  3  mills  making  news  print, 
located  at  Sault  Ste.  Marie,  Sturgeon  Falls,  and  Espanola,  Ontario, 
Canada.  The  next  largest  Canadian  manufacturers  are  the  Lauren- 
tide  Co.  (Ltd.),  at  Grand  Mere,  Quebec;  Powell  River  Co.  (Ltd.), 
at  Powell  River,  British  Columbia;  Price  Bros.  &  Co.  (Ltd.),  at 
Kenogami  and  Jonquiere,  Quebec;  and  the  Abitibi  Power  &  Paper 
Co.  (Ltd.),  at  Iroquois  Falls,  Ontario,  which  did  not  begin  operation 
on  news  until  the  middle  of  1915. 

Production  and  shipments. — The  tons  of  news-print  paper  pro- 
duced and  shipped  by  the  principal  companies  in  the  United  States 
and  Canada  and  the  total  production  and  shipments  of  all  mills  in 
each  country  are  shown  in  Table  1  below  for  the  calendar  years 
1913,  1914,  1915,  and  1916.  The  figures  for  the  companies  shown  in 
detail  and  for  some  others  were  obtained  directly  from  their  books. 
Some  of  the  figures  included  in  the  item  "  all  others  "  were  obtained 
by  correspondence  with  the  manufacturers.  The  companies  are 
arranged  in  order  of  tons  produced  in  1916.  Every  company  known 
to  have  produced  any  news  print  during  the  4-year  period  has  been 
included  in  the  total  figures. 


'..immmtm 


&mmm&SM:. 


m^^ 


32 


REPORT   ON   NEWS-PRINT  PAPER  INDUSTRY. 


Tablk  l.-PRODUCTION  AND   SHIPMENTS   OF  NKWS-PRINT  PAPER  BY  PRINCIPAL 
UNITED  STATES  AND  CANADIAN  COMPANIES,  1913-1918^ 


Companies. 


United  States: 

International  Paper  Co , 

Great  Ncxthem  Paper  Co , 

Crown  Willamette  Paper  Co 

Minnesota  &  Ontario  Power  Co 

Remington  Paper  &  Power  Co 

De  Grasse  Paper  Co 

Berlin  Mills  Co 

•     St.  Croix  Paper  Co 

Pejepscot  Paper  Co 

Consolidated  Water  Power  &  Paper  Co. 

Finch,  Pruyn&Co.  (Inc.) 

St.  Regis  Paper  Co 

Tidewater  Paper  Mills  Co 

Gould  Paper  Co 

All  others  (31  compames) 


1913 


Production 


Total  United  States. 


Canada: 

Spanish  River  Pulp  &  Paper  Mills  (Ltd.) 

Powell  River  Co.  (Ltd.) 1 

Laurentide  Co.  (Ltd.) 

Price  Bros.  &  Co.  (Ltd.) 

Belgo-Canadian  Pulp  &  Paper  Co.  (Ltd.) 

Fort  Frances  Pulp  &  Paper  Co.  (Ltd.)  > 

J.  R.  Booth 

Donnacona  Paper  Co.  (Ltd.) 

All  others  (6  companies) 


Tons. 
402.763 
150,082 
86,343 
65,181 
44,9Si 
35,146 
62,334 
37,042 
35,000 
29.439 
32.250 
36.009 
26,848 
19,217 
241,987 


Shipments. 


1,304,595 


Total  Canada. 


>  109,000 
43,959 
62,269 
26.369 
36,380 


Tons. 

423,106 

147, 242 
78,190 
65,435 
43,074 
35.196 
62,880 
37.626 
35,000 
29.577 
32,367 
37,720 
27,338 
18,497 

240,015 


1914 


Production. 


1,313,263 


Tons. 
379. 810 
169,082 
75,779 
64,124 
45,914 
40,872 
51,583 
40,311 
23,406 
30,428 
30,677 
41,512 
27,492 
23,666 
238,278 


Shipments. 


1,282,934 


35,355 


37, 115 


350.447 


Total »  United  States  and  Canada. 


1,655,(M2 


1105,000 
39,140 
61,919 
24,602 
36,392 


34,313 


37, 115 


118,894 
44,767 
64,260 
42,808 
36,465 
16,067 
37,015 
7,480 
47,236 


338,481 


414,982 


1,651,744 


1,697,916 


I  Estimated. 

•Subsidiary  of  Minnesota  &  Ontario  Power  Co. 

•  Th«w  totals  may  include  a  very  small  tonnage  of  paper  other  tb<a  news  prinl. 


Tons. 

379,342 

172,347 

80,009 

63,028 

46,583 

40,872 

52,013 

40,733 

24,293 

29,894 

31,356 

42,303 

•27,060 

22,313 

235,750 


1,287,986 


118,332 
45,552 
64,439 
42,754 
38,358 
15,033 
36,916 
9.317 
47,236 


415,937 


1,702,923 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTBY.  33 

Ti.BL«  1.- PRODUCTION   AND   SHIPMENTS    OF   NEWS-PRINT   PAPER   BY  PRINCIPAL 
UNITED  STATES  AND  CANADLA.N  COMPANIEg,  1913-1916-Continued. 


Companies. 


United  States: 
1  International  Paper  Co. 


Great  Northern  Paper  Co 

Crown  Willamette  Paper  Co 

Minnesota  &  Ontario  Power  Co 

Remington  Paper  &  Power  Co 

De  Grasse  Papwr  Co 

Berlin  Mills  Co 

St.  Croix  Paper  Co 

Pejepscot  Paper  Co 

Consolidated  Water  Power  &  Paper  Co. 

Finch,  Pruyn  &  Co.  (Inc.) 

St.  Regis  Paper  Co 

Tidewater  Paper  Mills  Co 

Gould  Paper  Co 

All  others  (31  companies) 


1915 


Production. 


Total  United  States. 


Canada: 

Spanish  River  Pulp  &  Paper  Mills  (Ltd.). 

Powell  River  Co.  (Ltd.) 

Laurentide  Co.  (Ltd.) 

Abltlbl  Power  &  Paper  Co.  (Ltd.) « 

Price  Bros.  &  Co.  (Ltd.) 

Belgo-Canadian  Pulp  &  Paper  Co.  (Ltd.). 
Fort  Frances  Pulp  &  Paper  Co.  (Ltd.) ». . 

J.  R.  Booth 

Donnacona  Paper  Co.  (Ltd.) 

All  others  (6  compames) 


Total  Canada. 


Total  *  United  States  and  Canada. 


Tons. 
340,236 
181,880 
76,958 
59,096 
33, 110 
46, 598 
44,809 
40,628 
37,277 
35,481 
32,731 
22,249 
27, 151 
26,088 
234,830 


Shipments. 


1,239,122 


Tons. 
344,549 
188,720 
80,218 
60,583 
32,053 
47,831 
45,678 
41, 117 
38,015 
35,638 
33,930 
26,794 
27,223 
26,110 
239, 741 


19161 


Pfoduotlon. 


1,268,200 


115,289 
50,307 
65,648 
17,971 
47,279 
38,204 
31,696 
35.363 
14, 470 
72,414 


488, 621 


1,727,743 


115,434 
51,  IM 
65,573 
16,866 
45,318 
38,155 
32,487 
35,300 
14,685 
75,567 


490,485 


1,758,685 


Tons. 
373,263 
197,533 
94,069 
87,042 
49,426 
43,909 
40,882 
39,190 
38,709 
36,816 
32,383 
31, 116 
28,798 
25,767 
236,273 


ShIpmeBta. 


1,355,196 


Tom. 

383,448 

193,  C77 

108,977 

87,441 

49,550 

43,909 

42,047 

39,268 

38,649 

37,155 

32,705 

31,493 

26,7% 

25,253 

238,923 


130,436 
64,113 
63,037 
62,071 
53,523 
50,725 
39,439 
38,679 
18,242 
87,728 


607,976 


1,963,172 


1,374,221 


132,932 
65,307 
62,806 
62,053 
55,893 
51,166 
39,497 
38,658 
17,733 
88,179 


614,226 


1,988,447 


1  The  production  and  shipments  for  the  month  of  December,  1916,  were  estimated  by  the  companies. 

'Began  operations  in  1915. 

'Subsidiary  of  Minnesota  &  Ontario  Power  Co. 

♦These  totals  may  include  a  very  small  tonnage  of  paper  other  than  news  print 

The  table  shows  that  the  14  United  States  companies  having  an 
output  of  more  than  25,000  tons  each  in  1916  produced  in  the  aggre- 
gate more  than  82  per  cent  of  the  total  domestic  production,  while 
the  31  smaller  companies  included  in  the  item  "  all  others  "  produced 
less  than  18  per  cent.  Likewise  in  1916  the  9  Canadian  companies 
shown  in  the  table  produced  more  than  85  per  cent  of  the  Canadian 
production,  while  the  remaining  6  companies  produced  less  than  15 
per  cent. 

The  four  lai-gest  companies  in  the  United  States  in  1916  produced 
the  following  percentages  of  the  total  domestic  production  and  of  the 
total  production  on  the  North  American  Continent: 
88569*— 17 3 


^km 


34 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


Company. 


International  Paper  Ck> 

Great  Northern  Paper  Co 

Crown  Willamette  Paper  Co. . ., . 
Minnesota  &  Ontario  Power  Co. . 


Total. 


Tons  pro- 
duced. 


373,263 

197,533 

94,089 

87,042 


751,927 


Percentage 

of  United 

States 

output. 


27.6 

14.6 

6.9 

6.4 


65.5 


Percentage 

of  output 

of  North 

American 

Continent. 


19.0 

10.1 

4.8 

16.4 


40.3 


« Including  39,430  tons  of  the  Fort  Frances  Pulp  &  Paper  Co.  (Ltd.)  of  Canada,  a  subsidiary  of  the 
Minnesota  &  Ontario  Power  Co. 

The  Spanish  River  Pulp  &  Paper  Mills  (Ltd.),  which  was  the 
largest  Canadian  manufacturer  in  1916,  produced  130,436  tons  of 
news-print  paper,  or  21.5  per  cent  of  the  total  Canadian  output  and 
6.6  per  cent  of  the  total  output  of  the  North  American  Continent. 

Domestic  production  decreased  about  65,000  tons  during  the  years 
1913  to  1915.  The  production  for  the  whole  year  1916,  December 
being  estimated,  exceeded  that  of  1913  by  about  50,000  tons  and  that 
of  1915  by  116,000  tons.  This  was  accomplished  in  spite  of  an  actual 
decrease  in  the  number  of  mills  in  operation. 

Canadian  production  increased  about  138,000  tons  during  the 
years  1913  to  1915,  and  the  1916  production,  December  being  esti- 
mated, was  about  120,000  tons  greater  than  for  the  preceding  year. 
This  great  increase  in  production  was  accomplished  chiefly  by  build- 
ing new  mills  and  adding  new  machines  to  old  mills.  More  than  75 
per  cent  of  the  Canadian  output  finds  a  market  in  the  United  States. 

The  total  production  for  United  States  and  Canada  in  1916, 
December  being  estimated,  was  nearly  1,964,000  tons,  or  an  increase 
of  more  than  235,000  tons  over  1915.  This  increase  is  equivalent  to 
nearly  760  tons  a  day,  allowing  310  working  days  a  year. 

Shipments  showed  movements  similar  to  those  of  production.  In 
general  they  were  slightly  larger  than  the  tonnage  produced,  owing 
in  part  to  some  duplication  caused  by  companies  buying  from  one 
another,  which  could  not  be  eliminated,  and  in  1915  and  1916  to  a 
decrease  in  stocks  on  hand. 

Equipment. — Table  2  below  shows  the  equipment  of  the  ground- 
wood,  sulphite,  and  paper  mills  of  the  16  largest  United  States  news- 
print manufacturers  and  the  11  largest  Canadian  manufacturers  on 
January  1,  1916.  These  figures  were  compiled  from  Post's  Paper 
Mill  Directory,  Lockwood's  Directory  of  the  Paper  and  Stationery 
Trades,  and  from  information  obtained  directly  from  the  companies. 
The  figures  for  the  maximum  24-hour  capacity  of  grinders,  digesters, 
and  paper  machines  are  estimates.  The  ratings  for  the  paper 
machines  are  those  used  by  the  News  Print  Manufacturers'  Associa- 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY.         35 

tion  in  its  statistical  reports.  The  ground-wood  and  sulphite  equip- 
ment of  most  of  the  companies  shown  is  in  excess  of  the  news-print 
requirements,  some  of  these  materials  being  sold  or  used  in  making 
other  grades  of  paper.  The  Fourdrinier  paper  machines,  on  the  other 
hand,  are  those  running  wholly  or  partly  upon  news  print. 

Table  2.— EQUIPMENT  OF  16  UNITED  STATES  MANUFACTURERS  AND  11  CANADIAN 
MANUFACTURERS  OF  NEWS-PRINT  PAPER  IN  1916. 


Ground  wood. 

Sulphite. 

News  print. 

Companies. 

Mills 

Grind- 
•     ers. 

24 -hour 
capac-    Mills 
ity. 

!  Digest- 
ers. 

.  24-hou] 
capac- 
ity. 

Mills 

Paper 

ma- 

chines. 

24 -hour 
capac- 
ity. 

United  States: 

International  Paper  Co 

Great  Northern  Paper  Co 

Crown  Willamette  Paper  Co. . . 
Minnesota  &  Ontario  Power  Co. 
De  Orasse  Paper  Co 

23 
4 
6 
1 
1 
1 
1 
2 

2 
3 

1 

273 
102 
81 
24 
24 
30 
22 
26 

24 
36 
20 

Tons. 

1,276 
410 
366 
168 
125 
150 
175 
140 

60 
180 
137 

8 
2 

4 
1 

1 
1 

1 
1 

4A 

17 

16 

4 

4 
4 
2 

4 

Tons. 

470 

200 

205 

120 

35 

120 

60 

35 

12 
3 
2 

1 
1 
1 
1 
2 

2 

3 

1 
1 
1 
1 
1 

1 

50 
14 
8 
2 
4 
3 
3 
4 

4 
5 
3 
2 
4 
3 
2 

2 

Tons. 
1,500 
604 
250 
220 
175 
160 

Berlin  Mills  Co 

St.  Croix  Paper  Co 

Pejepscot  Paper  Co 

161 
132 

120 
158 
106 

Consolidated  Water  Power  & 
Paper  Co 

Remington  Paper  &  Power  Co. 
Finch,  Pruyn  &  Co.  (Inc.) 

1 

3 

42 

Tidewater  Paper  Mills  Co 

02 

St.  Regis  Paper  Co 

3 

4 
2 

1 

33 
20 
17 

11 

200 

114 

93 

60 

2 
1 

1 

6 
3 
2 

90 
45 
50 

145 
84 
62 

55 

Gould  Paper  Co 

^     Northwest  Paper  Co 

Wisconsin    River    Paper    & 
Pulp  Co 

Total,  16  U.  S.  companies . . . 

54 

743 

3,654 

24 

109 

1,472 

34 

113 

3,994 

Canada: 

Spanish  River  Pulp  &  Paper 
Mills  (Ltd.) 

3 

1 

1 
1 
3 

1 

1 

1 
1 

2 
1 

60 
37 

20 
24 
36 
26 

22 

15 
12 

41 
12 

390 
250 

250 
220 
240 
160 

160 

100 
75 

240    . 
50    . 

2 

1 

1 
1 
1 
1 

1 

4 
4 

2 
2 
2 

4 

2 

135 
110 

60 

50 

60 

125 

50 

3 

1 

1 

1 
2 
1 

1 

1 
1 

1 
1 

10 
6 

4 
4 
4 
3 

4 

2 
1 

1 
1 

444 
200 

225 

225 
180 
135 

127 

150 
60 

Laurentide  Co.  (Ltd.) 

Abitlbl  Power  &  Paper  Co. 
(Ltd.) 

PoweU  River  Co.  (Ltd.) 

Price  Bros.  &  Co.  (Ltd.) 

J.  R,  Booth 

Belgo-Canadian  Pulp  &  Paper 
Co.  (Ltd.) 

Fort  Frances  Pulp  &  Paper 
Co.  (Ltd.) 

Donnaoona  Paper  Co.  (Ltd.) .. 
Brompton  Pulp  &  Paper  Co. 
(Ltd.) 

1 

1 

30 

Canada  Paper  Co.  (Ltd.) 

40 

Total,  11  Canadian  companies 

16 
70 

305 

2,135 

9 

21 

620 

14 

40         1,831 

Total,  16  United  States  and 
11  Canadian  Companies.. 

1,048 

6,789 

33 

130 

2,092 

48 

153 

6,825 

^^^' 


I 


36  EEPOKT  ON   NEWS-PRINT  PAPEB  INDUSTEY. 

The  16  largest  domestic  manufacturers,  whose  combined  output 
represents  more  than  85  per  cent  of  the  total  production  of  the  United 
States,  together  operated  54  ground-wood  mills  equipped  with  7« 
grinders,  24  sulphite  plants  equipped  with  109  digesters,  and  34 
paper  mills  having  113  Fourdrinier  machines  running  on  news  print. 
Some  of  these  companies  had  other  mills  and  other  machines  not 
running  on  news  print.  Three  of  these  large  companies  did  not  have 
sulphite  plants,  and  one  did  not  have  either  a  sulphite  or  ground- 

""  The  11  Canadian  manufacturers  operated  16  ground-wood  mills 
equipped  with  305  grinders,  9  sulphite  plants  equipped  with  21 
digesters,  and  14  news-print  mills  equipped  with  40  paper  machmes. 
Three  of  the  companies  did  not  have  sulphite  plants,  but  all  were 
eauipped  with  ground- wood  mills. 

The  24-hour  capacity  of  mills  shown  in  the  table  is  considerably 
in  excess  of  the  actual  production  of  news  print,  since  this  is  a  max- 
imum figure  and  also  since  some  of  the  machines  are  only  run  part 
of  the  time  on  this  grade.  For  instance,  in  1916  the  International 
Paper  Co.  produced  at  the  rate  of  1,200  tons  per  day,  allowmg  310 
working  days  in  the  year,  although  shown  in  the  table  as  havmg  a 

capacity  of  1,500  tons.  .  j^i.    *   i,    *  :„ 

The  speed,  in  feet  per  minute,  and  the  maximum  width  of  sheet  in 
inches,  of  the  113  paper  machines  operated  on  news  print  by  16 
United  States  companies,  is  shown  by  the  following  tabulation: 

SPEED  PER  MINUTE  AND  MAXIMUM  WIDTH  OP  TRIM  OP  113  PAPER  MACHINES  OP  1. 
SPEED  PtK  Ml«u  UNITED  STATES  COMPANIES,  1916. 


Speed  per  minute. 


300  to  399  feet. 
400to424  1eet. 
425  to  449  feet. 
450  to  474  feet. 
475  to  499  feet. 
500  to  524  feet. 
525  to  549  feet. 
650  to  574  feet. 
675  to  599  feet. 
600  to  649  feet. 
660  to  699  feet. 


Number  of 
machines. 


11 
4 

7 
15 
10 
14 

5 
22 

9 
14 

2 


Width  of  trim. 


70  to  79  Inches — 
80  to  89 Inches.... 
90  to  99  Inches — 
100  to  109 Inches.. 
110  to  119  inches.. 
120  to  129  Inches., 
130  to  139  inches. 
140  to  149  inches. 
150  to  159  Inches. 
160  to  169  inches. 
170  to  179  inches. 


Number  of 
machines. 


14 

10 

13 

15 

10 

6 

S7 

8 

6 

1 


Eleven  of  the  machines  of  the  16  principal  domestic  companies  had 
a  speed  of  less  than  400  feet  per  minute  and  36  otliers  had  a  speed 
less  than  500  feet  per  minute.  Fifty  had  a  speed  between  500  and 
600  feet  and  16  a  speed  above  600  feet.  Thirty-three  of  the  ma- 
chLes  had  a  maximum  trim  of  less  than  100  mches,  71  machmes 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY. 


37 


had  a  maximum  trim  between  100  and  150  inches,  and  9  machines 
had  a  trim  above  150  inches. 

The  newer  machines,  as  a  rule,  have  a  wider  trim  and  higher  speed 
than  the  older  machines,  so  that  the  above  figures  are  a  good  index 
of  the  character  of  the  equipment  of  the  principal  manufacturers. 

For  comparative  purposes  the  speed  of  machines  and  width  of 
sheet  are  given  in  the  tabulation  below  for  the  40  Fourdrinier  ma- 
chines operated  on  news  print  by  the  11  principal  Canadian  manu- 
facturers : 

SPEED  PER  MINUTE  AND  MAXIMUM  WIDTH  OF  TRIM  OF  40  PAPER  MACHINES  FOR  11 

CANADIAN  COMPANIES,  1916. 


Speed  per  minute. 

Number  of 
machines. 

Speed  per  minute. 

Number  of 
machines. 

47fi  to  490  feet                     

1 
3 
0 

1 

575  to  599  feet 

6 

JifiO  to  .S24  feet                     

600  to  624  feet 

19 

Ria  to  MQ  feet                                

625  to  649  feet 

4 

fiSO  to  574  foet                                   

650  to  699  feet 

7 

Width  of  trim. 

Number  of 
machines. 

Width  ol  trim. 

Number  of 
mactiines. 

^  tn  RQ  inohfts                              .......... 

1 
1 

4 
7 
0 
2 

140  to  149  inches 

u 

on  tn  QQ  itipVi A<5i                                               

150  to  159  inches 

s 

inn  tm  1A0  iTiphAJ?                                          

160'to  169  inches 

0 

llA  ti\  110  iTif»}iA.'^                                             -  -    - 

170  to  179  inches 

6 

\0t\  tft  190  inohA!%                                        

180  to  189  inches 

1 

130  to  139  inches            

190  to  199  inches 

2 

The  tabulation  shows  that  30  of  the  40  machines  operated  by  Cana- 
dian companies  have  a  speed  above  600  feet  per  minute,  and  25  of  the 
40  machines  have  a  trim  above  140  inches.  These  figures  do  not  in- 
clude the  new  machine  of  the  Donnacona  Paper  Co.,  which  began 
operations  on  November  1, 1916.  This  machine  is  said  to  have  a  speed 
of  600  to  625  feet  per  minute  and  a  maximum  width  of  sheet  of  148 
inches. 

Consumption  or  raw  materials. — ^Information  obtained  from  12 
principal  United  States  companies  and  9  principal  Canadian  com- 
panies shows  that  in  1915  they  used  the  following  quantities  of  sul- 
phite and  ground  wood  in  producing  news-print  paper : 


News 
print 
pro- 
duced. 

Ground  wood  as«d. 

Sulphite  used. 

Percent- 
age of 
sulphite 
to  total 
pulp. 

Companies.             . 

Total. 

Quantity 

per  ton 

of  paper. 

Total. 

Quantity 

per  ton 

01  paper. 

12  United  States  comnanies 

Tons. 
954,892 
416,207 

Tons. 
767,458 
328,302 

Tons. 
0.804 
.789 

Tons. 

224,652 

109,445 

Ttns. 
0.235 
.263 

22.6 

9  Canadian  com nanies 

25.0 

Total,  21  companies  combined 

1,371,099 

1,095,760 

.799 

334,097 

.244 

23.4 

I 


38 


REPOBT   ON    NEWS-PRINT  PAPER  INDUSTRY. 


The  12  United  States  companies  produced  77  per  cent  of  the  total 
domestic  output  of  news-print  paper  in  1915  and  the  9  Canadian 
companies  more  than  85  per  cent  of  the  total  Canadian  output. 
United  States  companies  used  on  the  average  0.804  of  a  ton  of  ground 
wood  and  0.235  of  a  ton  of  sulphite  in  making  a  ton  of  paper.  Cana- 
dian companies  used  0.789  of  a  ton  of  ground  wood  and  0.263  of  a 
ton  of  sulphite,  and  United  States  and  Canadian  companies  com- 
bined used  0.799  of  a  ton  of  ground  wood  and  0.244  of  a  ton  of 
sulphite  in  a  ton  of  paper. 

The  average  percentage  of  sulphite  to  total  pulp  used  for  United 
States  and  Canadian  companies  combined  was  23.4  per  cent.  The 
average  for  domestic  mills  was  22.6  per  cent  and  for  Canadian  mills 
25  per  cent.  Applying  the  proportions  of  the  two  raw  materials 
used  by  the  principal  companies  to  the  total  production  of  news- 
print paper  in  the  United  States  and  Canada,  a  fairly  close  estimate 
is  obtained  of  the  total  quantity  of  ground  wood  and  sulphite  used 
by  all  companies  in  both  countries  in  making  news-print  paper  in 
1915.    This  is  shown  by  the  following  tabulation: 


Companies. 


All  United  States  companies. 
All  Canadian  companies 


Total  United  States  and  Canadian  companies  combined 


News 

print 

produced. 


Tons. 
1,239,122 

488,621 


1,727,743 


Ground 
wood 
used. 


Tons. 
995,897 

385,375 


1,381,272 


Sulphite 
used. 


Tons. 
291,521 

128,487 


420.008 


The  wide  variation  existing  in  the  percentage  of  sulphite  to  total 
pulp  used  by  different  companies  is  shown  by  Table  3,  which  presents 
the  data  for  12  principal  United  States  companies  and  9  principal 
Canadian  companies  for  1915  and  the  first  half  of  1916. 

Tablk  3 -PERCENTAGE  OF  SULPHITE  TO  TOTAL  PULP  FOR  12  PRINCIPAL  UNITED 
STATES  COMPANIES  AND    9   PRINCIPAL    CANADIAN  COMPANIES,    1915-1916    (FIRST 

HALF).  


United  States  companies. 


1. 
3. 


4.. 

6.. 
6.. 
7.. 
8.. 
9.. 
10. 
11. 
12. 


1915 


Average. 


33.4 
28.4 
26.4 
28.4 
24.8 
22.0 
22.2 
21.3 
18.9 
19.9 
S3.7 
13.3 


First 
half 
1916. 


22.6 


34.5 
31.2 
28.5 
27.6 
23.1 
21.3 
20.6 
20.3 
19.5 
18.7 
14.9 
12.8 


Canadian  companies. 


22.4 


Average 

Average  for  12  United  States 
and  9  Canadian  companies 


1915 


27.2 
24.9 
25.9 
25.8 
25.3 
23.9 
23.7 
23.9 
2L3 


First 
half 
1916. 


28.3 
27.4 


25.0 


23.4 


25.3 
24.7 
24.0 
23.7 
23.4 
23.8 


25.0 


23.8 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY. 


39 


The  table  shows  that  the  percentage  of  sulphite  used  by  the  12 
United  States  mills  in  the  first  half  of  1916  ranged  from  12.8  per 
cent  to  34.5  per  cent  with  an  average  of  22.4  per  cent,  and  by  the  9 
Canadian  mills  from  23.3  per  cent  to  28.3  per  cent  with  an  average 
of  25  per  cent.  The  percentage  of  sulphite  necessary  to  make  paper 
is  affected  by  the  method  of  treating  ground  wood,  the  character  of 
the  equipment,  etc.  The  paper  must  have  sufficient  tensile  strength 
to  run  through  the  paper  machines  without  breaking,  otherwise  the 
daily  output  of  the  machines  will  be  reduced.  This  fixes  a  minimum 
below  which  it  is  not  economical  to  reduce  the  percentage  of  sul- 
phite used. 

The  12  United  States  mills  taken  together  used  slightly  less  sul- 
phite in  the  first  half  of  1916  than  they  did  in  1915,  while  the  Cana- 
dian mills  used  the  same  proportion  in  each  period.  Information  ob- 
tained from  some  of  the  United  States  companies  for  a  part  of  the 
second  half  of  1916  indicates  that  there  was  a  further  decrease  in  the 
percentage  of  sulphite  used  during  that  period. 

From  data  collected  by  the  Commission  an  estimate  has  been  made 
of  the  average  quantity  of  rough  wood  used  by  news-print  companies 
in  making  sulphite,  ground  wood,  and  news-print  paper  in  1915. 
Peeled  wood  and  rossed  wood  have  been  converted  to  the  rough-wood 
basis  by  using  the  best  estimates  available.  Reports  from  the  12 
United  States  companies  and  the  9  Canadian  companies  show  the 
following  results: 


Companies. 


12  United  States  companies 

9Canadian  companies 

Total,  21  companies  combined 


Cords  used 

in  ton  of 

ground 

wood. 


l.OS 

1.16 


1.10 


Cords  used 
in  ton  of 
sulphite. 


2.12 
2.15 


2.13 


Cords  used 
in  ton  of 
news- 
print 
paper. 


1.S6 

1.48 


1.40 


If  the  percentages  shown  in  the  preceding  tabulation  for  21  com- 
panies are  applied  to  the  total  production  of  ground  wood,  sulphite, 
and  news-print  paper  for  all  companies  in  the  United  States  and 
Canada,  the  total  cords  of  rough  wood  used  would  be  as  follows: 


Companies. 


All  United  States  companies 

All  Canadian  companies 

Total  Unitod  States  and  Canadian  companies  combined 


Cords  of 

wood  used 

in  ground 

wood. 


1,073,834 
447,497 


1,521,331 


Cords  of 
wood  used 
in  sul- 
phite. 


Cords  of 
wood  used 
in  news- 
print piH?er. 


•17,170 
276,135 


893,305 


1,601,004 
723,632 


2,414,696 


40 


KEPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY.         41 


i. 


i|il 


Considerable  variation  exists  in  the  quantities  of  wood  used  by 
different  companies  in  producing  a  ton  of  paper.  For  instance, 
reports  from  companies  in  the  United  States  show  that  considerably 
over  half  of  the  paper  included  in  the  tabulation  above  was  produced 
from  about  IJ  cords  of  rough  wood  per  ton,  although  one  company 
which  produced  a  little  over  8  per  cent  of  the  paper  used  about  1} 
cords  per  ton.  In  this  connection  it  is  important  to  note  that  the 
use  of  a  large  quantity  of  wood  does  not  necessarily  mean  a  high 
wood  cost  per  ton  of  paper,  because,  as  a  rule,  the  cheaper  the  wood 
the  more  freely  it  may  be  used.  For  example,  the  detailed  figures 
for  two  of  the  large  producers  show  that  in  1915  one  used  42  per 
cent  more  wood  than  the  other,  while  the  cost  of  its  wood  per  ton  of 
paper  was  only  15  per  cent  greater.  In  the  first  half  of  1916  it  used 
mo.-e  than  42  per  cent  more  wood,  while  the  cost  of  its  wood  per  ton 
of  paper  was  only  6  per  cent  greater  than  that  of  the  other  producer. 
Both  companies  produced  their  paper  at  a  very  low  cost. 

It  is  to  be  noted  also  that  if  th^  present  high  prices  of  wood  con- 
tinue, processes  of  manufacture  that  economize  wood  will  probably 
be  adopted.  The  possible  economy  in  wood  through  such  processes 
is  indicated  by  the  following  excerpt  from  the  Paper  Trade  Journal 
of  November  30,  1916,  which  relates  to  a  recently  invented  but  well- 
tested  process : 

The  quantity  of  final  rejection  is  very  small,  200  tons  of  fin- 
ished paper  showing  a  yield  of  sand,  knots,  bark,  etc.,  of  about 
200  pounds,  when  using  140  cords  of  peeled  spruce  to  produce 
the  200  tons  of  paper. 
By  this  process  apparently  a  ton  of  paper  can  be  produced  from 
0.7  of  a  cord  of  peeled  spruce  (about  0.8  of  a  cord  of  rough  wood) 
as  compared  with  1.40  cords  shown  above. 

Section  5.  News-Print  Mamifacturers  Association. 

The  News-Print  Manufacturers  Association  is  a  voluntary  asso- 
ciation organized  April  1,  1915,  and  composed  of  nearly  all  the  im- 
portant news-print  and  hanging  paper  manufacturers  on  the  North 
American  Continent.  Prior  to  1915  these  manufacturers  constituted 
a  division  of  the  American  Paper  &  Pulp  Association. 

The  secretary  of  the  association  is  George  F.  Steele,  whose  princi- 
pal duty  is  to  accumulate  and  disseminate  to  members  information 
concerning  materials,  processes,  machinery,  improvements,  etc.,  and 
statistical  data  covering  stocks  on  hand,  quantities  produced,  and 

quantities  shipped. 

The   News-Print  Manufacturers   Association   is  managed   by    an 

•  executive  committee  of  five  members,  who  represent  51  per  cent  of 

the  total  output  of  all  its  members,  which  in  1916  represented  about 

82  per  cent  of  the  total  production  of  news  print  in  the  United 


States  and  Canada.  The  members  of  the  executive  committee  and 
the  1916  output  of  news  print  represented  by  each  are  shown  in  the 
tabulation  below : 


Members  of  executive 
committee. 


PhlUp  T.  Dodge 
George  H.  Mead 

J.  H.  A.  Acer. . . 

E.  W.  Backus.. 
Q.  H.  P.  Gould. 


Name  of  company. 


Position  in 
company. 


International  Paper  Co 

Spanish  River  Pulp  &  Paper  Mills  (Ltd.) 

The  Lake  Superior  Paper  Co.  (Ltd.) 

The  George  H.  Mead  Co.,  Dayton,  Ohio 

Sales  agent  for  the  above  and  also  for  the 

Abitibi  Power  &  Paper  Co.  (Ltd.) 

Laurentide  Co.  (Ltd.) 


Minnesota  &  Ontario  Power  Co 

Fort  Frances  Pulp  &  P^per  C!o.  (Ltd.) 

Gould  Paper  Co 

St.  Regis  Paper  Co.i 

Donnacona  Paper  Co.  (Ltd.) 


President. 
do.... 


-do. 


.do. 


Treasurer  and 
sales  mana- 
ger. 

President 


.do. 


-do. 
.do. 
-do. 


Total  represented  by  executive  committee . 


1916 
production. 


Tons. 
373,263 

130,436 


62,071 
63,037 


87,042 
39,430 
25,767 
31, 116 
18,242 


830,404 


»This  company  was  sold  in  December,  1916. 

The  total  production  of  news-print  paper  on  the  North  American 
Continent  in  1916,  as  shown  by  Table  1,  above,  was  1,963,172  tons. 
Of  this  tonnage,  1,616,307  tons,  or  more  than  82  per  cent  of  the  total, 
were  produced  by  members  of  the  association. 

The  principal  companies  outside  of  the  association,  and  their 
production  in  1916,  were  as  follows: 


Companies  outside  association. 


Companies  connected  with  newspapers: ' 

Ontario  Paper  Co.  (Ltd.),  (Chicago  Tribune) ... . 

DeGrasse  Paper  Co.  (New  York  World) 

News  Pulp  &  Paper  Co.  (Ltd.),  (Montreal  Star) . 
Other  companies: 

GreatNcnthem  Paper  Co , 

Tidewater  Paper  Mills  Co 

Alexandria  Paper  Co 

Inland  Empire  Paper  Co 

Nine  other  small  companies 


Total. 


Produc- 
tion in  1916b 


Tom. 
82,741 


197,533 
28,798 
14,971 
11,113 
10,709 


346,865 


'The  Itasca  Paper  Co.,  Grand  Rapids,  Minn.,  was  purchased  by  the  St.  Paul  Dispatch  and  Pioneer 
Press  in  September,  1916. 

The  organization  of  the  News-Print  Manufacturers  Association  and 
the  concentration  of  control  through  the  executive  committee  has  led 


42 


REPORT  ON  NEWS-PRINT  PAPER  INDUSTRY. 


I 


to  less  competition  in  the  industry.  For  further  information  on  this 
point  see  Chapter  VII.  This  result  has  been  aided  by  the  existence  of 
several  selling  agencies  and  jobbers  who  handle  the  output  of  various 
mills.  For  instance,  as  shown  above,  the  George  H.  Mead  Co.  in  1916 
handled  192,507  tons  of  Canadian  paper.  H.  G.  Craig  &  Co.,  another 
selling  agency,  in  1916  represented  9  different  mills,  being  the  ex- 
clusive agent  of  several  of  them.  The  aggregate  tonnage  thus  con- 
centrated amounted  to  more  than  100,000  tons.  The  Manufacturers 
Paper  Co.  also  sold  the  output  of  several  mills.  Neither  of  these 
last  two  concerns  is  directly  represented  on  the  executive  conmiittee 
of  the  News-Print  Manufacturers  Association. 

In  1916  there  was  formed  the  Canadian  Export  Paper  Co.,  the  pur- 
pose of  which  was  to  pool  the  export  business  of  several  Canadian 
companies.^  This  group  will  be  represented  on  the  executive  com- 
mittee by  the  Laurentide  officer,  at  .present  on  the  conmiittee,  and  will 
probably  control  one-third  of  the  entire  Canadian  output  of  news- 
print paper. 

Section  6.  Paper  jobbers  and  sales  agents. 

There  are  two  kinds  of  middle  men  handling  news  print — jobbers 
and  sales  agents.  The  distinction  between  the  two  is  that  the  jobber 
usually  buys  and  resells,  while  the  sales  agent  chiefly  sells  on  com- 
mission. The  three  largest  sales  agents  on  the  North  American  con- 
tinent are  the  George  H.  Mead  Co.,  Canadian  Export  Paper  Co., 
and  H.  G.  Craig  &  Co.  Each  of  these  concerns  represents  several 
mills,  and  together  they  handle  several  hundred  thousand  tons  of 
news-print  paper  annually.  Their  sales  are  largely  to  the  daily 
papers  and  jobbing  trade.  There  are  several  other  sales  agents 
which  handle  the  output  of  a  particular  mill,  such  as  W.  H.  Parsons 
&  Co.,  which  sells  for  the  Pejepscot  Paper  Co.,  both  the  manufac- 
turing and  the  selling  company  being  controlled  by  the  same  interests. 

The  jobber  handles  many  grades  of  paper  and  often  does  a  com- 
mission business  as  well  as  buying  and  reselling  on  his  own  account. 
The  conmiission  business  is  usually  for  sales  of  news-print  and 
book  paper  on  contracts  with  publishers.  When  such  contracts  are 
made  the  jobber  covers  them  by  making  similar  contracts,  either 
direct  or  through  selling  agents,  with  the  manufacturer,  who  makes 
shipments  direct  to  the  publisher. 

Almost  every  city  of  any  importance  has  one  or  more  jobbers  or 
wholesale  paper  houses  which  carry  various  kinds  of  paper.  Often 
such  a  house  makes  a  specialty  of  some  particular  grade,  such  as 
high-grade  printing  paper,  bond  paper,  writing  paper,  kraft  or 
wrapping  paper,  building  paper,   paper  bags,   twine^  etc.     While 

>  For  detaUs  see  Chap.  YII.  p.  180. 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY.         43 

practically  all  the  jobbers  handling  printing  paper  handle  some 
news  print,  very  few  make  a  specialty  of  it.  The  reason  given  by 
a  number  of  jobbers  is  that  there  is  little  or  no  profit  in  it,  and 
they  only  carry  it,  as  a  grocer  carries  sugar,  to  attract  trade  for 
other  kinds  of  paper.  A  few  of  the  very  large  jobbers,  however, 
do  a  considerable  business  in  news  print,  both  in  rolls  and  sheets. 
Ten  of  them  perhaps  handle  more  than  75  per  cent  of  all  the  news 
print  sold  by  jobbers.  None  of  these  depend  on  a  single  mill  for 
their  supply  of  news,  although  several  have  allotments  of  a  certain 
portion  of  the  output  of  a  particular  mill. 

A  considerable  proportion  of  the  sales  of  news  print  by  jobbers 
is  for  miscellaneous  purposes,  many  of  them  selling  very  little,  if 
any,  to  publishers.  The  jobbers  making  a  specialty  of  news  print 
in  addition  to  their  contract  business  handle  large  quantities  of 
both  roll  and  sheet  news  on  current  transactions.  Part  of  this 
business  passes  through  the  jobbers'  warehouses,  especially  purchases 
in  ton  lots  or  less.  Carload  shipments  are  usually  made  direct 
from  the  mill.  Lots  from  a  ton  up  to  a  carload  may  be  shipped 
either  direct  from  the  mill  or  from  the  jobbers'  warehouses. 

The  principal  advantage  a  publisher  has  in  buying  his  require- 
ments of  news  print  through  a  jobber  instead  of  direct  from  the 
manufacturer  is  in  the  matter  of  service.  The  jobber  normally 
carries  a  stock  of  roll  and  sheet  news,  and,  being  more  conveniently 
located  with  respect  to  shipping  facilities  than  the  manufacturer, 
can  tide  the  publisheij  over  in  case  of  a  sudden  shortage  due  to  such 
causes  as  failure  of  a  car  to  arrive  promptly,  freight  embargo  or 
congestion,  strikes,  fires,  etc.  This  is  especially  true  of  publishers 
not  located  in  the  large  cities  where  the  manufacturers  keep  stocks. 
Another  advantage  is  in  the  matter  of  extension  of  credits.  A  cus- 
tomer with  a  good  credit  standing  can  usually  secure  from  the  jobber 
extensions  of  credit,  especially  if  he  is  an  old  customer,  whereas 
purchases  direct  from  the  manufacturer  are  usually  cash  or  net  30 
days.  A  third  advantage  for  less-than-carload  lots  is  the  saving  in 
freight.  The  jobber  pays  the  carload  rates  for  the  long  haul  on 
his  warehouse  stock  and  the  less-than-carload  rate  is  charged  only 
for  the  short  haul. 

Section  7.  Imports  and  exports  of  news-print  paper. 

Imports. — In  1901  the  United  States  imported  less  than  a  thousand 
dollars  worth  of  news  print.  In  the  fiscal  year  1906  such  imports 
amounted  to  only  $64,382.  Since  that  year  the  increase  has  been 
rapid  and  uninterrupted.     In  the  fiscal  year  1910  the  quantity  im- 


I"-  IT  ^    -jr 


I, 


44 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


ported  was  twenty- five  times  what  it  had  been  in  1906.^  In  the 
calendar  year  1916  the  output  of  domestic  mills  supplied  only  about 
70  per  cent  of  the  total  consumption,  practically  all  the  remainder 
being  imported  from  Canada. 

The  steadily  increasing  dependence  of  the  United  States  on  Canada 
for  supplies  of  news  print  is  shown  by  the  following  table : 

Table  4.— IMPORTS  INTO  THE  UNITED  STATES  OF  PRINTINO  PAPER  VALUED  AT  NOT 

ABOVE  2.5  CENTS »   PER   POUND,  1911-1916. 


Fiscal  year  ending  June  30 — 

1911 

1912 

1913 

1914 

1915 

1916 

Six  months  ending- 
June  30,  1915 

Dec.  31, 1915 

Twelve  months,  1915. . 

Six  months  ending- 
June  30,  1916 

Dec.  31, 1916 

Twelve  montlis,  1916. . 

Monthly: 

July,  1916 

August,  1916 

September,  1916 

October,  1916 

November,  1916 

December,  1916 


Canada. 


Total 


Quantity. 


Tmt. 
53,118 
55,563 
14C,733 
274,842 
329,314 
438,212 


165,644 
201,276 


366,920 


236,935 
231,017 


467,952 


40,106 
40,806 
36,360 
38,562 
38,737 
36,446 


Value.' 


$1,968,385 
2,101,023 
5,646,289 
10,634,926 
12,742,743 
16,646,891 


6,418,291 
7,657,843 


14,076,134 


8,989,048 
9,525,109 


18,614,157 


1,534,795 
1,625,010 
1,491,007 
1,614,178 
1,655,815 
1,604,304 


Quantity. 


Tons. 
54,022 

56,854 

147,479 

278,071 

332,782 

438,746 


166,842 
201,567 


368,409 


237,179 
231,051 


468,230 


40,106 
40,806 
36,360 
38,562 
38,737 
36,480 


Value." 


$2,010,502 
2,155,501 
5,681,109 
10,765,108 
12,883,452 
16,670,604 


6,467,864 
7,670,787 


14,138,651 


8,999,817 
9,527,931 


18,527,748 


1,634,795 
1,625,010 
1,491,007 
1,614,178 
1,655,816 
1,607,126 


>  Since  Sept.  8,  1916,  5  cents  per  pound. 

*  These  figures  do  not  represent  accurately  the  cost  of  this  news  print  to  the  American  publisher  as  most 
of  the  paper  is  entered  at  an  officially  established  v>iluation  of  138  per  ton. 

Fiscal  year  imports  increased  from  54,022  tons  in  1911  to  438,746 
tons  in  1916.  Since  1912  the  annual  increase  has  not  fallen  below 
50,000  tons,  and  in  two  years  it  has  exceeded  100,000  tons.  In  the 
fiscal  year  1916  these  imports  were  over  eight  times  as  large  as  in 
1911.  They  increased  from  368,409  tons  in  the  calendar  year  1915 
to  468,230  tons  in  1916. 

1  Import  statistics  never  have  carried  a  news-print  classification,  and  the  classification 
by  value,  used  here,  was  shown  only  under  "  Imports  for  consumption  "  prior  to  1911. 
Since  that  date  it  is  also  shown  in  the  regular  import  returns. 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY.         45 

Canada's  rapid  progress  as  a  factor  in  the  situation  is  illustrated 
by  the  increase  in  the  proportion  of  the  total  supply  of  the  United 
States  imported  from  that  country.  Ten  years  ago  Canada  fur- 
nished but  a  fraction  of  1  per  cent  of  the  news  print  used  in  the 
United  States;  in  1909,  less  than  4  per  cent;  in  1916,  about  30  per 
cent.  The  imports  from  Canada  amounted  to  about  75  per  cent 
of  the  total  Canadian  production  in  the  calendar  year  1915  and 
about  78  per  cent  in  1916.  In  the  latter  year  Canada's  over-sea 
exports  amounted  to  about  53,000  tons,  or  9  per  cent  of  the  total 
output,  leaving  about  81,800  tons  or  13  per  cent  for  home  consump- 
tion. 

A  very  large  part  of  the  imports  from  Canada  come  in  over  the 
northern  border,  but  since  1913  entries  at  Pacific  ports  have  usually 
run  from  one  to  one  and  a  half  million  dollars  annually.  These 
figures,  of  course,  take  no  account  of  the  exchange  arrangement  be- 
tween a  United  States  and  Canadian  company  referred  to  on  page  47 
below. 

Import  duties. — For  124  years  prior  to  1913  duties  were  imposed 
upon  the  importation  of  news-print  paper  into  the  United  States. 
The  tariff  law  passed  in  1909  reduced  the  duty  to  three-sixteenths 
of  a  cent  per  pound,  equivalent  to  $3.75  a  ton,  upon  news  print 
valued  at  not  above  2J  cents  per  pound,  and  the  Canadian  reciprocity 
law  passed  in  1911  removed  the  duty  entirely  on  imports  of  news- 
print paper  and  pulp  from  Canada,  except  where  the  Canadian  Gov- 
ernment imposed  an  export  duty.  The  tariff  act  of  1913  put  news- 
print paper  from  all  countries  valued  at  not  above  2^  cents  per  pound 
upon  the  free  list.  If  valued  at  above  2J  cents  per  pound  a  duty  of  12 
per  cent  was  imposed.  About  60  per  cent  of  the  Canadian  paper 
came  in  free  in  1912.  In  1913  over  $1,000,000  worth  of  the  Canadian 
paper  was  still  paying  duty,  but  since  October  3,  1913,  no  duty  has 
been  paid  on  printing  paper  valued  at  not  over  2^  cents  per  pound 
in  the  country  whence  exported.  The  rise  in  price  in  1916  led 
to  the  enactment  of  a  provision  in  the  revenue  law  approved  Septem- 
ber 8,  1916,  raising  the  minimum  of  2J  cents  per  pound  to  5  cents. 
This  was  done  in  anticipation  of  the  market  price  in  Canada  going 
above  2^  cents,  which  would  cause  the  12  per  cent  duty  to  be  imposed 
upon  imports  into  this  country.  For  further  details  see  Exhibits 
3  and  4. 

Exports. — Prior  to  1911  export  figures  were  not  shown  separately 
in  our  foreign- trade  statistics.  Since  1911  they  have  run  as  Table  5 
indicates: 


'''^"!WWI««i»*'    a      -^  *«B^f<^   t,-i>t*-iM.  ^ 


1 


46 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


Table  5.— EXPORTS  OF  NEWS-PRINT  PAPER  FROM  THE  UNITED  STATES,  1911-1916. 


Periods. 

Quantity. 

Total 
value. 

Value  per 
ton. 

Fiscal  year  ending  June  30— 

1911 

Tons. 
49,755 
51,787 
50,213 
44,483 
62,841 
63,634 

$2,434,964 
2,501,529 
2,450,520 
2,177,483 
3,079,137 
3,119,364 

148.93 

1912 

1913 

48.30 

1914 

48.80 
48.94 
48.98 
49.02 

1915 

1916 

6  months  ending— 

June30,1915 

25,752 
29,409 

1,307,732 
1,399,894 

M.78 
47.60 

Dec.  31, 1915 

12  months,  1915 

55, 161 

2,707,626 

49.09 

6  months  ending — 

June  30, 1916 

34,212 
42,115 

1,715,917 
2,378,858 

60.16 
56.48 

Dec.31, 1916 

12  months,  1916 

76,327 

4,094,775 

53.64 

Months: 

July,  1916 

7,454 
11,636 
6,597 
4,941 
6,618 
5,870 

422,486 
599,354 
370,704 
316,061 
311,183 
359,070 

56.68 
61.61 
56.19 
63.97 
55.39 
61.17 

August,  1916 

September,  1916 

October,  1916 

November,  1916 

December,  1916 

ti        £.. 


The  smallest  quantity  exported  during  the  last  six  fiscal  years  was 
44,483  tons  in  1914  immediately  preceding  the  outbreak  of  the  Euro- 
pean war.  In  the  calendar  year  1916  exports  had  increased  to  76,327 
tons,  which  was  5.6  per  cent  of  the  domestic  production  for  the  same 
period. 

The  increase  in  exports  in  1916  was  in  considerable  degree  due  to 
shipments  to  various  countries  such  as  France,  Portugal,  Greece, 
China,  etc.,  which  prior  to  the  year  1916  imported  little  or  no  news 
print  from  this  country. 

The  only  domestic  manufacturer  that  has  developed  an  export 
trade  of  considerable  importance  is  the  International  Paper  Co.  That 
company  supphes  foreign  publishers  under  contracts  similar  to  those 
used  in  the  domestic  trade.  Aside  from  the  International's  business, 
news  print  exports  are  apparently  made  up  of  odd  lots  handled  by 
trading  companies.  That  there  was  a  considerable  increase  in  this 
odd  lot  business  during  1916  is  indicated  by  the  fact  that  the  Inter- 
national Paper  Co.'s  proportion  of  total  exports  fell  from  85.6  per 
cent  in  the  first  half  of  1915  to  61  per  cent  in  the  first  half  of  1916. 
Prior  to  1915,  so  far  as  information  is  available,  that  company's  pro- 
portion of  the  total  had  never  fallen  below  75  per  cent 


GENERAL  DESCRIPTION  OF  NEWS-PRINT  PAPER  INDUSTRY.         47 

• 

The  records  of  the  Bureau  of  Foreign  and  Domestic  Commerce 
show  a  considerable  variation  in  prices  on  news-print  paper  ex- 
ported during  a  given  month.  For  example,  shipments  to  Australia 
in  August,  1916,  varied  from  less  than  2  to  over  5  cents  per  pound. 
The  low  price  which  was  on  shipments  from  Portland,  Oreg.,  was 
due  to  an  exchange  of  paper  between  a  Canadian  and  a  United 
States  company,  the  latter  exporting  for  the  former,  in  exchange 
for  Canadian  paper  delivered  in  other  Pacific  coast  ports.  This 
arrangement  was  made  because  the  Canadian  company  could  not 
obtain  shipping  facilities  in  Vancouver  or  Seattle.  Export  figures 
for  later  months  in  the  year  indicated  that  this  exchange  arrange- 
ment was  still  in  force.  These  shipments  probably  amounted  to  over 
5,000  tons  during  1916. 


i 


■  W^M^.!^!;pit:.; 


'I^.'fiit^y^,'i^^lim*jy:'-M^^!'.  y*»-'°^::  "■■/i^lll^-  ■■i  - 


PRICES  OF    NEWS-PBI-NT  PAPEB. 


49 


CHAPTER  in. 

PRICES  OF  NEWS-PRIin:  PAPEE. 

Section  1.  Introdnction. 

The  great  bulk  of  the  news-print  paper  output  on  the  North 
American  Continent  is  bought  by  publishers  of  the  larger  dailies  on 
contracts  which  provide  for  the  delivery  of  a  certain  tonnage  at  a 
fixed  price.  The  contracts  usually  run  for  one  year,  but  on  the 
Pacific  coast  the  prevailing  term  is  five  years.  These  larger  pub- 
lishers use  roll  paper,  which  is  shipped  to  them  in  carload  lots 
directly  from  the  mill,  though  frequently  purchased  from  a  jobber 
or  selling  agent. 

The  large  number  of  the  smaller  dailies,  weeklies,  and  semiweeklies, 
which  depend  upon  the  open  market  for  their  supplies  of  paper,  use 
a  relatively  small  part  of  the  news-print  output.  Most  of  these 
publishers  use  sheet  paper,  which  is  purchased  in  less  than  carload 
lots  from  jobbers. 

The  detailed  price  data  presented  herein  show  the  open-market 
prices  paid  by  the  smaller  publishers  and  the  contract  prices  paid 
by  the  larger  publishers  in  1916  and  prior  years.  To  show  what 
effect  the  increase  in  prices  to  publishers  which  occurred  in  1916  had 
on  the  receipts  of  news-print  manufacturers,  the  average  receipts 
per  ton  f.  o.  b.  mill  have  also  been  computed  for  mills  in  different 
years. 

Price  statistics  were  obtained  from  the  original  contracts  on  file  in 
the  offices  of  the  various  paper  mills  and  jobbers  visited  by  agents  of 
the  Commission,  from  the  sales  records  of  these  companies,  and  from 
data  furnished  by  newspaper  publishers  in  response  to  schedules 
sent  them  by  the  Commission. 

Prices  paid  by  different  publishers  vary  widely  during  the  same 
period.  These  differences  depend  partly  upon  distance  from  mills, 
method  of  purchase,  size  of  purchase,  quality  of  the  paper,  and 
credit  standing  of  the  purchaser. 

The  chief  cause  of  the  variation  in  prices  between  different  sec- 
tions of  the  country  is  the  wide  range  in  freight  rates  due  to  the 
localization  of  the  news-print  industry  in  the  spruce  timber  regions 

of  northern  United  States  and  in  Canada.     The  relatively  high 
48 


freight  rate  on  news  print  in  comparison  with  its  value  at  the 
mill  makes  this  an  important  factor.  As  compared  with  freight  rates 
of  12  to  15  cents  per  100  pounds  on  carload  shipments  to  New  York 
City,  for  example,  the  rates  on  similar  shipments  to  certain  cities  of 
the  Southwest  are  more  than  $1,  representing  at  the  prevailing 
market  price  during  the  year  1915  approximately  30  per  cent  of  the 
total  cost  to  the  purchaser.  The  cost  to  the  publisher  of  the  East, 
the  North,  and  the  Pacific  Northwest  was  accordingly  15  to  25  per 
cent  lower  than  the  cost  to  purchasers  in  the  extreme  South  and 
Southwest. 

Variations  in  prices  paid  by  different  publishers  in  the  same 
locality  are  due  to  the  method  of  purchase,  the  size  of  purchase,  and 
the  quality  of  the  paper.  Contract  purchases  ordinarily  average  a 
lower  price  than  market  purchases,  and  transactions  involving  large 
quantities  a  lower  price  than  those  involving  small  quantities.  Small 
purchases  are  made  through  jobbers,  as  a  rule,  and  must  bear  middle- 
men's profits  and  commissions.  Instances  have  been  noted  where 
paper  has  passed  through  as  many  as  three  middlemen's  hands  before 
reaching  the  publisher. 

Even  when  the  quantities  of  paper  purchased  are  the  same  and 
the  publishers  are  in  the  same  locality  there  is  a  variation  in  prices, 
due  to  the  fact  that  some  of  the  mills  are  able  to  get  a  higher  price 
than  others  on  account  of  the  quality  of  their  paper,  greater  ability  to 
deliver  on  their  contracts,  etc. 

The  price  statistics  have  been  assembled  as  far  as  possible  in  a 
manner  to  bring  out  the  effect  of  the  various  factors  which  govern 
the  price  of  news  print  in  different  localities  and  among  different 
classes  of  purchasers.  This  has  involved  a  separation  of  contract 
prices  from  market  or  current  prices,  and  the  grouping  of  the  data 
by  quantity  sold,  and  by  localities  having  the  same  general  level  of 
freight  rates. 

In  order  to  facilitate  a  comparison  by  localities  the  country  has 
been  divided  into  six  groups  of  States,  as  follows : 

(1)  Eastern. — This  group  includes  the  New  England  States  and 
the  States  of  New  York  and  New  Jersey,  Delaware,  Pennsylvania, 
Maryland  and  Virginia.  The  news-print  paper  consumed  in  these 
States  is  a  product  of  the  mills  of  the  eastern  United  States  and 
Canada.  Freight  charges  on  paper  shipped  in  carload  lots  from 
Canada  average  about  20  cents  per  100  pounds  to  localities  north  of 
the  Potomac  River  as  compared  with  about  30  cents  to  Virginia.  In 
the  case  of  shipments  from  domestic  mills  the  freight  rate  on  carload 
lots  is  about  14  cents  to  New  York  City  as  against  about  17  cents 
to  localities  in  Pennsylvania  and  about  20  cents  to  points  in  Virginia. 
885e9'— 17 4 


p  ^HpjI^^'^PJ^WIJP' 


I 


50 


REPORT  ON    N^EWS-PMNT  PAPER   INDUSTRY. 


(2)  Middle  W estem.- -T\n^  group  includes  the  States  of  West 
Virginia,  Ohio,  Indiana,  Illinois,  and  Kentucky.  News-print  paper 
used  in  this  territory  is  obtained  in  some  cases  from  centers  of  pro- 
duction in  the  eastern  United  States  and  Canada,  but  to  a  large 
extent  is  the  product  of  the  paper  mills  in  the  States  bordering  on 
the  Great  Lakes  and  the  adjoining  Canadian  Province.  Within  this 
group  freight  rates  on  carload  lots  vary  from  about  10  to  20  cents 
to  points  in  Ohio  and  northern  Illinois  and  Indiana,  with  an  average 
of  about  20  cents  to  points  in  West  Virginia  and  Kentucky. 

(3)  Southern.— This  group  includes  the  territory  south  of  Vir- 
ginia and  Kentucky  and  east  of  the  Mississippi  River.  The  news 
print  consumed  in  this  territory  is  largely  the  product  of  the  paper 
mills  of  New  England  and  the  States  bordering  on  the  Great  Lakes, 
and  in  the  case  of  the  smaller  papers,  is  usually  purchased  from 
jobbers  in  the  South  and  Middle  West.  The  freight  rates  per  100 
pounds  on  news  print  shipped  in  carload  quantities  to  cities  within 
this  group  range  from  a  minimum  of  about  26  cents  to  a  maximum 

of  about  45  cents.  t.,.  ,- 

(4)  North  Central.— This  group  includes  the  States  of  Michigan, 
Wisconsin,  and  Minnesota,  each  of  which  contains  one  or  more  news- 
print mills.  The  freight  rate  on  paper  consumed  within  this  group 
is  relatively  low,  averaging  about  13  cents  per  100  pounds  in  the 
case  of  carload  shipments  from  domestic  mills.  On  shipments  from 
Canadian  mills  the  freight  rates  average  about  18  cents. 

(5)  Western.— This,  group  includes  the  territory  between  the  Mis- 
sissippi River  and  the  States  of  the  Pacific  coast,  with  the  exception 
of  Minnesota.  News-print  paper  sold  in  this  territory  is  drawn 
from  as  far  east  as  the  Province  of  Quebec,  Canada,  and  as  far  west 
as  British  Columbia.  On  account  of  the  distance  from  the  centers 
of  production,  the  price  of  paper  in  this  territory  is  relatively  high. 
The  freight  rates  on  carload  shipments  range  from  about  15  cents  on 
deliveries  in  Iowa  to  $1.07  on  shipments  to  localities  near  the  south- 
western border  of  the  United  States. 

(6)  Paci-flc  coast.— ThQ  States  of  California,  Oregon,  and  Wash- 
ington are  included  in  this  group.  Most  of  the  important  daily 
papers  in  these  States  obtain  news-print  paper  under  contracts  with 
miUs  in  the  Pacific  Northwest.  The  newspapers  of  smaller  circu- 
lation purchase  paper,  as  a  rule,  through  jobbers  in  Seattle,  Port- 
land, Los  Angeles,  and  San  Francisco.  Contract  prices  in  this  group 
show  a  wide  variition.  The  range  in  freight  charges  on  carload 
shipments  is  from  a  rate  of  about  7.5  cents  in  Oregon  to  a  rate  of 
about  62.5  cents  to  southern  California. 


PRICES   OF    NEWS-PRINT  PAPER. 


51 


Section  2.  Open-market  prices. 

There  was  a  large  increase  in  prices  paid  by  publishers  purchasing 
their  paper  on  current  orders  as  needed  during  1916.  This  increase 
was  much  greater  than  for  contract  purchases,  which  are  considered 
later.  Only  a  small  proportion  of  the  total  sales  of  news-print  paper, 
probably  not  more  than  10  per  cent,  is  sold  on  current  orders.  Under 
ordinary  conditions  most  of  this  is  sheet  paper  which  is  bought  in 
small  quantities  by  country  weeklies,  while  some  of  it  is  roll  paper 
bought  by  publishers  of  small  dailies  whose  requirements  do  not 
amount  to  more  than  a  car  or  two  a  year.  During  1916,  however, 
considerable  quantities  of  roll  paper  were  purchased  in  the  open 
market  by  publishers  of  the  larger  dailies  whose  contracts  did  not 
cover  their  entire  requirements  on  account  of  increased  consumption, 
or  who  were  unable  to  renew  their  contracts. 

The  open-market  prices  of  roll  paper  in  carload  lots  or  over  in 
1915  were  generally  less  than  $2.35  per  100  pounds  f .  o.  b.  destination, 
while  during  the  third  quarter  of  1916  the  minimum  prices  in  prac- 
tically all  the  States  for  which  prices  were  tabulated  were  more  than 
$3,  and  by  December,  1916,  the  price  had  advanced  to  more  than  $5 
f.  o.  b.  mill. 

Open-market  prices  for  sheet  news  showed  an  even  greater  increase 
in  1916.  For  current  orders  of  from  1  to  17  tons,  inclusive,  the 
maximum  prices  in  the  third  quarter  of  1916  were  in  many  cases 
higher  by  $2  to  $3  per  100  pounds  than  the  maximum  prices  in  1915, 
while  in  December,  1916,  the  prices  were  sometimes  $4  per  100  pounds 
higher  than  in  1915. 

Range  of  open-market  prices  of  roll  news. — Table  6  below 
shows  the  range  in  prices  paid  by  publishers  on  market  purchases 
of  not  less  than  one  car,  or  18  tons  of  news-print  paper  in  rolls  for 
the  year  1915  and  for  each  of  the  first  three  quarters  of  1916.  Ow- 
ing to  lack  of  time  it  was  impossible  for  the  Commission  to  obtain 
complete  data  for  the  third  quarter  of  1916  from  all  of  the  com- 
panies represented  in  the  tabulation  for  the  earlier  periods.  The 
figures  for  this  quarter  should  therefore  be  accepted  with  caution. 
Information  received  from  publishers  shows  that  sales  were  made  in 
a  number  of  instances  during  the  third  quarter  of  1916  at  materially 
higher  prices  than  are  shown  in  the  table. 


52 


REPORT  ON   NEWS-PBINT  PAPEB  INDUSTRY. 


Table  6 -RANGE  OF  OPEN-MARKET  PRICES  TO  PUBLISHERS  ON  PURCHASES  OF  18 
TONS  OR  OVErIoF  NEWS-PRINT  PAPER  IN  ROLLS,  BY  STATES.  191^1916. 

tDellvered  f.  o.  b.  destination.) 


Group  and  State. 


Date  of  order  and  range  of  prices  per  100  pounds. 


1915 


1916 


Eastern  group: 

Massachusetts 

Rtiode  Island  and  Connecticut 

New  York 

New  Jersey 

Pennsylvania 

Middle  Western  group: 

West  Virginia 

Ohio 

Indiana 

Illinois 

Kentucky 

North  Central  group: 

Michigan,  Wisconsin,  and  Minnesota. 
Western  group: 

Iowa 

South  Dakota 

Nebraska  and  Kansas 

Missouri  and  Arkansas 


$2.10-12.35 


1.98-  2.61 
2.05-  2.35 
2.0O-  2.25 

2.02-  2.15 
1.92-  2.15 
2.05-  2.25 
1.94-  2.41 
2.04-  2.18 

1.95—  2.15 

2.10-  2.21 
2.32 


First  quar- 
ter. 


S2.10-S2.35 


2.00-  2.52 


2. 10-  2. 80 
2. 20-  2. 50 
2.00-2.35 

2.15-  2.35 
1.92-  2.39 
2.  OO-  2. 44 
2.00-  2.50 
2.13-  2.49 

2.11-  2.28 
2.15-  2.49 


Second  quar- 
ter. 


2.33-  2.35 
2.75 


S2. 55-J3. 50 

2.41 

2.20-  3.50 

2.30-  3.50 
2.05-  3.37 
2.02-  3.50 
3.14-4.00 
3.60-  4.00 

2.23-  3.76 

2.50-3.49 
4.(B 

2.25-  4.20 
8.60 


Third  quar- 
ter.i 


S3.21-S3.91 
3.41-3.51 
2.75-3.56 


2.23-4.25 
8.75 


3.50-3.80 
3. 14-  4. 50 
3.27-3.49 

4.83-5.00 


4.06-  6.36 


t  Prices  for  the  third  quarter  are  not  complete,  especially  for  September. 

Comparing  the  year  1915  with  the  third  quarter  of  1916,  the  great- 
est increases  in  prices,  as  shown  by  the  ranges  in  the  table,  were 
as  follows:  Michigan,  Wisconsin,  and  Minnesota,  from  a  range  of 
$1  95-$2.15  to  $4.83-$5  per  100  pounds;  Indiana,  from  a  range  of 
$2  05-$2.25  to  a  range  of  $3.50-$3  50  per  100  pounds;  Massachusetts, 
from  a  range  of  $2.10-$2.35  to  a  range  of  $3.21-$3.91;  Kentucky, 
from  a  range  of  $2.04-$2.18  to  a  range  of  $3.27-$3.49;  and  Pennsyl- 
vania, from  a  range  of  $2-$2.25  to  a  range  of  $2.23-$4.25. 

During  the  last  quarter  of  1916  open-market  prices  continued  to 
advance.  In  December,  1916,  roll  news  frequently  ranged  from  $5 
to  $6  per  100  pounds  f.  o.  b.  mill  as  compared  with  a  range  of  $1.92 
to  $2.61  per  100  pounds  f .  o.  b.  destination  in  1915. 

Range  of  open-market  prices  of  sheet  news.— The  price  of  news- 
print paper  in  sheets  is  influenced  by  a  number  of  factors  which  tend 
to  increase  the  cost  to  the  consumer  above  the  price  level  of  roll  paper. 
The  cost  of  manufacture  of  paper  in  sheets  is  somewhat  greater  than 
in  rolls  owing  to  the  additional  labor  involved  in  its  preparation  for 
market.  The  f .  o.  b.  mill  price,  as  a  rule,  is  from  10  cents  to  20  cents 
more  per  100  pounds  for  sheet  paper  than  for  rolls. 


PRICES  OF  NBWS-PBIKT  PAFBS. 


53 


Paper  finished  in  sheets  usually  reaches  the  consumer  through  job- 
bers, and  is  delivered  in  less-than-carload  quantities  to  a  much 
greater  extent  than  roll  paper.  Freight  and  jobbers'  profits  are  ac- 
cordingly higher  as  a  whole  on  sheet  paper  than  on  roll  paper. 

Table  7  below  shows  the  course  of  market  prices  paid  by  publishers 
for  sheet  news  in  quantities  varying  from  1  to  17  tons,  inclusive,  for 
the  year  1915  and  for  each  of  the  first  three  quarters  of  1916.  The 
figures  given  for  the  third  quarter  of  1916  represent  only  a  small 
percentage  of  the  total  sales  and  are  not  fully  representative  of  price 
fluctuations  during  that  period. 

Table  7.— RANGE  OF  OPEN-MARKET  PRICES  TO  PUBLISHERS  ON  PURCHASES  OF  1  TO 
17  TONS,  INCLUSIVE,  OF  NEWS-PRINT   PAPER  IN  SHEETS,  BY  STATES,  1915-191& 

IDeliveries  f .  0.  b.  destination.] 


Group  and  State. 


Eastern  group: 

Maine  and  New  Hampshire 

Massachusetts  and  Connecticut 

New  York 

New  Jersey 

Pennsylvania 

Delaware  and  Maryland 

Middle  Western  group: 

West  Virginia 

Ohio 

Indiana 

Kentucky 

Illinois 

North  Central  group: 

Michigan 

Wisconsin 

Minnesota 

Southern  group: 

North  Carolina 

South  Carolina 

Georgia 

Tennessee 

Alabama 

Florida 

Mississippi 

Western  group: 

Iowa 

Missouri 

North  Dakota 

South  Dakota 

Nebraska 

Kansas 


Date  of  order  and  range  of  prices  per  100  pounds. 


1915 


2.20-3.00  2.37-3.20 

2.30-2.80  2.17-4.15 

2.40-2.93  2.50-3.50 

2.65-  2.86  -  2.70-3.25 

2. 52-  2. 95  2. 18 

2.50-3.10  2.50-4.15 

*  Prices  for  the  third  quarter  of  1916  are  not  complete,  -specially 


$2. 40-f 2. 75 
2.1^-3.50 
2.08-3.00 
2.20-  3.30 
2.15-  3.00 
2.35-  2.75 

2.10-2.60 
2.30-2.70 
2.15-  2.80 
2.35-  3.10 
2.20-  2.95 

2.05-3.00 
2.10-2.85 
2.30-  2.75 

2.35-2.65 
2.30-  3.15 
2.40-2.75 
2.60-  2.90 
2.40-2.50 
3. 50-  3. 75 
2.30-2.65 


1916 


First 
quarter. 


$2.40-$2,75 
2. 45-  3. 75 
2.20-3.05 
2.35-3.60 
2.45-  4.50 
2. 75-  3. 41 

2.35-2.85 
2.45-3.25 
2.26-3.50 
2.60 
2.34-3.50 

2.25-3.00 
2.40-3.00 
2.40-3.00 

2.50-3.25 
2.50-3.28 
2.40-3.00 
2.25-3.75 
2.55-2.85 
4.00 
2.50-  4.00 


Second 
quarter. 


S2.75-$3.50 
3.0O-  4.50 
2.35-  5.00 
2.35-  4.10 
2.75-  4.50 
3.21 

2.75-  4.95 
3.00-  4.15 
2.60-  4.00 
2.60-  4.50 
2.63-5.00 

2.53-4.65 
2.75-4.45 
2.5&-4.50 

3.25-  4.50 
2.55-4.00 
2.95-  4.25 
8.75-4,40 
2.70-  4.63 
4.00-  4.50 
3.00-  4.00 

2.90-  4.50 
8.32-4.65 
3.2»-  4.78 
3.26-4.51 
4.00-  4.95 
3.15-5.05 

for  September 


Third 
quarter.* 


$3.40-S4.65 
3.62-  6.00 
3.39-  5.50 
3. 66-  5. 25 
3.6ft-  6.00 
4.50 

4.00-5.00 
4.tO-5.M 
3.25-5.5i 
4.50-  5.60 
4.22-6.09 

3.  •5-  4.75 
5.50-6.00 
4.00-5.75 

3.50 

3.84-4.20 

3.90-  4.50 

4.70 

5.00 


4.00-  4.50 

4.70-6.00 
4.43-6.07 
5.00-5.28 


3. 83-  6. 75 
4.25-6.35 


i 


54 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


Table?.— RANGE  OF  OPEN-MARKET  PRICES  TO  PUBLISHERS  ON  PURCHASES  OF  1  TO 
17  TONS ,  INCLUSIVE    OF  NEWS-PRINT   PAPER  IN    SHEETS,  ETC.— Continued. 


Date  of  order  and  nngfi 

of  prices  per  100  pounds. 

Group  and  State. 

1915 

191« 

First 
quarter. 

Second 
quarter. 

Third 
quarter. 

Western  group  -  continued. 

Idaho  

S3. 60 

$2.95-3.10 

2.50-  3.81 

2.55-  3.15 

3.76 

3. 25-  4. 10 

3.00-  4.14 
2.70-  4.04 
2.60-  4.50 

13.50 

S2. 95- 3.65 

3. 15-  3. 91 

3.0O-3.50 

3.75 

8.25-3.75 

3.15-  4.50 
3. 10-  4. 18 
2.84-  4.60 

t4. 75-S5. 00 

Oklahoma 

$3.60-$4.50 
3.91-  5.75 
3.25-  5.00 

4.60-  5.50 

Montana 

4. 60-  6. 25 

Texas 

5.00-  7.00 

Utah    

4. 50-  5. 29 

New  Mexico  and  Arizona 

3.25-  4.65 

3.50-  4.93 
3.64-  4.86 
3.25-  6.50 

5.00-  5.75 

Pacific  coast  group: 

Washinsrtou. 

4. 00-  6. 14 

Oregon 

4.60-  6.68 

California 

3.26-  6.00 

This  table  shows  that  there  was  a  rapid  increase  in  prices  on  orders 
of  from  1  to  17  tons  of  news-print  paper  in  sheets  during  1916.  In 
fact,  the  minimum  prices  were  higher  in  all  but  two  States — Washing- 
ton and  California — during  the  third  quarter  of  1916  than  the  maxi- 
mum prices  of  1915.  In  many  cases  they  were  more  than  $1  per  100 
pounds  higher.  The  maximum  prices  in  the  third  quarter  of  1916 
were  in  many  cases  higher  by  $2  to  $3  or  more  per  100  pounds  than 
the  maximum  prices  in  1915. 

The  greatest  increase  in  the  general  level  of  prices,  as  indicated  by 
the  ranges,  was  in  the  western  group,  which  includes  the  States  west 
of  the  Mississippi  River,  except  the  Pacific  coast  group,  while  the 
smallest  increase  was  found  in  the  latter  group. 

In  the  last  quarter  of  1916  open-market  prices  on  sheet  news  con- 
tinued to  advance.  In  December,  1916,  prices  for  less- than -carload 
lots  often  ranged  from  $6.50  to  $7.50  per  100  pounds,  as  compared  with 
$2.20  to  $4.20  at  the  beginning  of  the  year.  In  some  cases  sheet  paper 
in  less  than  ton  lots  sold  for  $8  or  more  per  100  pounds. 

During  the  latter  part  of  February,  1917,  the  open-market  price 
on  sheet  news  in  ton  lots  decreased  to  a  range  of  from  about  $5  to  $7 
per  100  pounds.  For  jobbers'  sales  prices  of  roll  and  sheet  news  see 
pages  78  and  79. 

Prices  of  ready-print  sheets. — More  than  90  per  cent  of  the  ready 
print  used  in  the  United  States  is  furnished  by  the  Western  News- 
paper Union.  The  price  of  ready  print  varies  according  to  the  size  of 
sheet  and  quantity  purchased  and  whether  with  or  without  advertis- 
ing. It  is  issued  in  folios  (two  pages  printed  and  two  pages  blank) 
and  in  quartos  (four  pages  printed  and  four  pages  blank).    The  siz- 


PRICES  OF    NEWS-PRINT  PAPER. 


55 


column  quarto,  size  30J  by  44 — 50-pound  paper,  is  the  one  most  used. 
The  prices  of  the  Western  Newspaper  Union  for  this  size  of  ready 
print  from  August  1,  1913,  to  August  1,  1916,  inclusive,  are  shown  in 
the  table  below : 

Table  8.— PRICES  OF  THE  WESTERN  NEWSPAPER  UNION  FOR  READY-PRINT  SHEETS 
PER  QUIRE  OF  SIX-COLUMN  QUARTO,  30J  BY  44— 50-POUND  PAPER,  AUG.  1,  1913,  TO 
AUG.  1,  1916,  INCLUSIVE. 

(Eight  pages,  four  printed  and  four  blank.] 


Quantity. 


Under  20  quires . . 

20  to  29  quires 

30  to  39  quires 

40  to  49  quires 

50  to  50  quires 

60  quires  and  over 


Aug.  1,  1913,  to 
July  31,  1916. 


With  ad- 
vertising, 


SO.  14 
.13 
.12 
.11 
.10 
.09 


Without 
adver- 
tising. 


$0.22 
.21 
.20 
.19 
.18 
.17 


Effective  from 
Aug.  1,  1916. 


With  ad- 
vertising. 


SO.  17 
.16 
.15 
.14 
.13 
.12 


Without 
adver- 
tising. 


SO.  25 
.24 
.S 
.B 

.n 
.ao 


These  prices  are  f.  o.  b.  the  nearest  branch  office  of  the  Western 
Newspaper  Union.  About  97  per  cent  of  the  papers  supplied  by  this 
company  use  ready  print  with  advertising  already  printed  on  it. 

There  was  no  change  in  prices  between  August  1,  1913,  and  July 
31,  1916,  while  the  increase,  effective  August  1,  1916,  was  3  cents  per 
quire.  On  paper  with  advertising  this  amounted  to  an  increase  of 
from  21.4  to  33.3  per  cent,  according  to  the  quantity  ordered. 

A  circular  letter  to  ready-print  customers  guaranteed  that  the 
rates  effective  August  1,  1916,  would  not  be  increased  during  the 
next  12  months,  and  that  when  market  conditions  become  normal  and 
former  paper  prices  are  restored  the  rates  will  be  reduced  accord- 
ingly. 

Section  3.  Contract  prices. 

There  was  a  slight  decrease  in  the  prices  at  which  contracts  for 
news-print  paper  were  made  during  the  period  from  1912  to  1915, 
inclusive.  There  was  a  continuous  increase,  however,  in  the  prices 
on  contracts  made  during  1916.  On  most  of  the  tonnage  contracted 
for  during  the  latter  part  of  1916  this  increase  was  about  60  per 
cent.     In  some  cases  the  increase  was  more  than   100  per  cent. 

About  90  per  cent  of  the  total  shipments  of  news-print  paper  is 
sold  under  contract.  Most  of  this  is  roll  paper  and  is  used  by  daily 
papers.  Most  of  the  daily  papers  in  the  larger  cities  use  more  than 
1,000  tons  of  paper  per  year.  In  some  cases  they  use  as  high  as 
30,000  tons  or  over.  On  the  other  hand,  the  daily  papers  in  the 
smaller  cities  ordinarily  use  less  than  1,000  tons  per  year,  and  in 
many  cases  100  tons  or  less. 


V^J 


■■  'laiiimiBiSiiiaiBaB******'! 


tAH^,i^3asciik,.:^..,:jt.  ■ 


56 


REPORT  ON    NEWS-PRINT  PAPER  INDUSTRY. 


PRICES  OF    NEWS-PRINT  PAPER. 


67 


Provisions  of  contracts. — Daily  papers  obtain  news  print  as  a  rule 
under  contracts  direct  with  manufacturers  or  through  large  whole- 
sale companies,  which  provide  for  the  delivery  to  the  purchaser  of  a 
certain  tonnage  of  paper  at  the  price,  on  the  terms,  and  for  the  period 
stipulated  in  the  agreement.* 

Three  common  forms  of  tonnage  specifications  existed  prior  to 
1917:  (1)  provision  for  the  entire  supply  with  an  estimate  of  the 
tonnage  required;  (2)  a  maximum  and  minimum  tonnage  specified; 
and  (3)  a  given  tonnage  specified,  with  a  leeway  of  from  5  to  10  per 
cent.    The  present  standard  contracts  provide  for  a  fixed  tonnage. 

In  the  territory  east  of  the  Mississippi  River  comparatively  few  of 
the  existing  contracts  cover  a  period  of  more  than  one  year,  and  in 
some  recent  cases  they  are  limited  to  shorter  periods,  while  on  the 
Pacific  coast  contracts  with  the  larger  dailies  usually  cover  a  period 
of  five  years.  Where  contracts  were  made  shortly  after  the  inception 
of  the  upward  trend  in  prices,  they  were  in  some  instances  limited 
to  a  period  of  not  more  than  six  months.  Most  of  the  contracts  made 
to  begin  during  the  last  half  of  1916  were  drawn  to  expire  with  the 
end  of  the  calendar  year.  Some  of  the  contracts  which  expired 
during  that  period  were  not  renewed,  the  publishers  being  placed  on 
a  current  market  basis. 

The  prices  paid  by  publishers  for  news-print  paper  in  some  cases 
include  the  cost  of  delivery  at  the  city  of  publication,  and  in  others 
are  f.  o.  b.  mill,  transportation  charges  being  collected  from  the 
customer  by  the  transportation  agencies.  In  contracts  between  news- 
print manufacturers  and  the  large  metropolitan  dailies  the  price, 
until  recent  months,  has  usually  been  for  delivery  at  the  pressroom 
of  the  publisher,  the  payment  of  both  freight  and  drayage  charges 
being  assumed  by  the  manufacturer.  As  a  measure  of  protection  to 
the  purchaser  in  the  case  of  an  interruption  of  traffic,  such  contracts 
have  usually  contained  a  stipulation  requiring  the  manufacturer  to 
keep  in  storage  at  all  times  in  the  city  at  which  the  paper  is  delivered 
a  sufficient  quantity  to  meet  the  requirements  of  the  publisher  for  a 
specified  period,  usually  not  less  than  10  days  to  2  weeks'  require- 
ments. 

In  connection  with  the  marked  advance  in  the  price  of  news-print 
paper  in  1916,  a  new  policy  was  announced  by  many  news-print 
paper  manufacturers  in  both  the  United  States  and  Canada,  namely, 
the  discontinuance  of  sales  for  delivery  at  the  pressroom  or  railroad 
delivery  station  and  a  substitution  of  delivery  to  the  purchaser  at 
the  mill.  This  policy  was  reflected  in  the  sales  records  of  a  number 
of  the  large  eastern  mills  for  the  months  of  July  and  August,  1916, 
and  has  been  adopted  in  almost  all  of  the  contracts  made  since  then. 
By  selling  f.  o.  b.  mill,  instead  of  sidewalk  or  pressroom,  the  man- 

>  S«e  ESxhlblt  5  for  forms  of  contract. 


ufacturer  is  relieved  of  the  necessity  of  carrying  a  supply  of  paper 
in  storage  in  various  cities  in  which  his  customers  are  located,  of 
providing  cartage  facilities  for  sidewalk  delivery,  and  also  of  the 
trouble  of  collecting  damages  from  the  railroads  for  injury  to  the 
paper  in  transit.  Any  increase  in  the  freight  rates  and  cartage 
charges  must  now  be  borne  by  the  publisher. 

In  the  territory  north  of  the  Potomac  and  Ohio  Rivers  and  east 
of  the  Missouri  River  the  freight  rates  to  most  points  range  between 
7.6  and  25  cents  per  100  pounds  with  an  average  of  about  15  cents. 
South  of  the  Potomac  and  Ohio  Rivers  and  east  of  the  Mississippi 
River  the  freight  rates  range  between  20  and  45  cents  per  100  pounds. 
In  the  Southwest  the  rates  range  from  40  cents  to  over  $1  per  100 
pounds. 

In  1916  the  cartage  charges  in  various  cities  ranged  from  2.5  cents 
to  6  cents  per  100  pounds,  and  storage  charges,  in  cases  where  the 
paper  was  stored,  were  about  2.5  cents  additional.  Cartage  and 
storage  together  generally  amounted  to  about  5  cents  per  100  pounds, 
although  in  some  cases  they  were  as  high  as  8  or  9  cents  per  100 
pounds.  However,  the  individual  publishers  are  now  paying  higher 
cartage  and  storage  charges  than  were  paid  by  the  manufacturers  in 
1916  for  deliveries  to  the  same  publishers. 

All  new  taxes  that  may  be  levied  upon  news-print  paper  are  also 
to  be  paid  by  the  publisher.  The  contract  form  of  one  large  manu- 
facturing company  contains  the  following  clause  on  this  point: 

Any  new  tax  of  any  nature  which  may  hereafter  be  levied  by 
any  Government,  State,  or  municipality  increasing  the  cost  of 
all  or  any  portion  of  the  said  paper  or  any  of  the  materials  used 
in  the  manufacture  thereof  shall  be  added  to  the  said  price  to  be 
paid  by  the  purchaser. 

No  leeway  is  allowed  in  the  tonnage.  The  publisher  must  order  a 
definite  tonnage  to  be  taken  during  the  contract  period  in  equal 
monthly  installments,  although  the  consumption  varies  at  different 
seasons  of  the  year. 

It  is  clear  that  these  changes  in  the  terms  of  contracts  must  increase 
the  actual  cost  of  the  paper  to  publishers.  A  traffic  specialist  em- 
ployed by  a  great  manufacturing  corporation  is  in  position  to  reduce 
actual  costs  of  transportation  and  minimize  the  chances  of  damage 
in  transit.  A  single  stock  in  any  one  locality  from  which  a  number 
of  publishers  draw  their  supplies  does  not  need  to  be  nearly  so  large 
as  the  aggregate  of  the  stocks  that  are  necessary  if  each  publisher 
stores  his  own  reserves. 

These  and  other  similar  additions  to  the  burden  of  the  publishers 
under  the  present  form  of  contract  together  constitute  an  economic 
loss  to  the  country  as  a  whole,  which  will  be  found  to  be  very  con- 
siderable in  amoimt. 


sm^mmmn 


I 


58 


REPORT  ON    NEWS-PRINT  PAPER  INDUSTRY. 


Range  of  prices  on  contracts  for  1,000  tons  or  over. — In  the  fol- 
lowing table  is  shown  the  course  of  prices  from  1912  to  1916  in  32 
large  cities  on  contracts  involving  not  less  than  1,000  tons  of  paper. 
The  figures  include  the  highest  and  lowest  prices  on  contracts  made 
in  each  period  for  paper  delivered  in  the  city  of  publication,  either 
at  the  railroad  station  or  on  the  sidewalk  at  the  pressroom  of  the 
publisher.  In  the  case  of  contracts  based  on  delivery  at  the  mill, 
destination  prices  were  obtained  by  adding  to  the  mill  price  the 
freight  rate  to  destination.  Where  this  rate  was  not  shown  by  the 
records  of  the  jobber  or  manufacturer,  rates  were  obtained  from 
tariffs  filed  with  the  Interstate  Commerce  Commission.  The  side- 
walk prices  differ  from  destination  prices  by  the  inclusion  in  the 
former  of  drayage  and  storage  charges,  which  range  from  2.5  to  5 
cents  per  100  pounds. 


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60 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


PRICES  OF   NEWS-PRINT  PAPER. 


61 


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The  above  table  shows  that  the  prices  of  news-print  paper  on  con- 
tracts of  1,000  tons  or  over  decreased  slightly  from  1912  to  1915. 
This  was  true  in  most  cases  for  both  the  lowest  and  highest  prices. 
Relatively  few  contracts  were  made  during  the  first  six  months  of 
1916. 

In  the  first  quarter  of  1916  the  general  level  of  contract  prices  was 
somewhat  higher  than  in  1915,  there  being  few  cities  in  which  there 
were  prices  as  low  as  the  minimum  prices  in  1915,  while  in  a  num- 
ber of  cities  there  were  prices  higher  than  the  maximum  prices 
in  1915. 

In  the  second  quarter  of  1916  there  was  a  distinct  advance  over 
the  maximum  prices  of  1915,  except  in  a  few  cities.  The  most  nota- 
ble advances  in  maximum  prices  were  in  the  following  cities: 
Chicago,  111.,  from  $2.05  to  $2.74,  an  advance  of  69  cents  per  100 
pounds;  Richmond,  Va.,  from  $2.10  to  $2.54,  an  advance  of  44  cents; 
Kansas  City,  Mo.,  from  $2.11  to  $2.51,  an  advance  of  40  cents;  Co- 
lumbus, Ohio,  from  $2.06  to  $2.45,  an  advance  of  39  cents;  St.  Paul, 
Minn.,  from  $2.01  to  $2.40,  an  advance  of  39  cents;  Denver,  Colo., 
from  $2.49  to  $2.83,  an  advance  of  34  cents ;  Minneapolis,  Minn.,  from 
$2.07  to  $2.40,  an  advance  of  33  cents;  New  Orleans,  La.,  from  $2.25 
to  $2.58,  an  advance  of  33  cents;  and  Toledo,  Ohio,  from  $2.10  to 
$2.40,  an  advance  of  30  cents.  It  will  be  noted  that  all  these  cities 
are  south  of  the  Potomac  or  west  of  the  Appalachian  Mountains. 
There  were  also  advances  in  maximum  prices  ranging  from  20  to  29 
cents  per  100  pounds  in  Cincinnati,  Ohio ;  Memphis,  Tenn. ;  Omaha, 
Nebr. ;  Scranton,  Pa. ;  Cleveland,  Ohio ;  Milwaukee,  Wis. ;  and  Louis- 
ville, Ky.  Scranton,  Pa.,  is  the  only  one  of  these  cities  north  of  the 
Potomac  and  east  of  the  Alleghenies. 

In  a  number  of  the  cities  no  contracts  were  signed  during  the 
second  quarter  of  1916,  while  in  a  few  others  contracts  were  signed 
at  about  the  same  level  as  the  1915  prices.  Examples  of  the  latter 
are  Boston,  Mass.;  Philadelphia,  Pa.;  and  Birmingham,  Ala.  The 
Boston  price  was  on  a  contract  signed  in  April,  1916.  The  Philadel- 
phia price  was  on  a  contract  which,  although  signed  in  May,  1916, 
was  effective  as  of  January  1,  1916. 

Only  one  contract  involving  1,000  tons  or  more  of  news  print  was 
made  in  the  Pacific  coast  group  in  1916.  As  prices  for  the  period 
1912  to  1915  alone  would  have  no  material  significance,  they  have  not 
been  included  in  the  table. 

Range  of  prices  on  contracts  for  loo  to  999  tons. — Table  10  fol- 
lowing gives  the  range  in  prices  on  contracts  for  100  to  999  tons, 
inclusive,  of  news  print  in  rolls,  by  States,  for  the  years  1913  to 
1915  and  for  each  of  the  first  two  quarters  of  1916. 


.^Zf-ff'iKfW'?:' 


62 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


PRICES  OF   NEWS-PRINT  PAPER. 


63 


Table  lO.-RANGE  OF  PRICES  ON  CONTRACTS  WITH  PUBLISHERS  FOR  100  TO  999 
TONS,  INCLUSIVE,  OF  NEWS-PRINT  PAPER  IN  ROLLS,  BY  STATES,  1913-1916  (FIRST 
HALF). 

Peliveries  f .  o.  b.  destination.! 


Group  and  Stat«. 


Eastern  group: 

New   Hampshire  and   Ver^ 

mont 

Massachusetts,  Rhode  Island, 

and  Connecticut 

New  York  and  New  Jersey. . 
Pennsylvania,  Delaware,  and 

Maryland 

Virginia 

Middle  Western  group: 

West  Virginia 

Ohio  and  Indiana 

Kentucky 

Illinois 

North  Central  group: 

Michigan  and  Wisconsin... 
Soathem  group: 

North  Carolina 

South  Carolina 

Georgia , 

Florida , 

Tennessee 

Alabama , 

Western  group: 

Iowa 

Missouri 

Arkansas 

North  Dakota 

South  Dakota 

Nebraska. 

Kansas 

Oldaboma 

Texas 

Montana 

New  Mexico  and  Arizona. . . 

Utah  and  Nevada 

Pacific  coast  group: 

Washington 

California 


Date  of  signing  contract  and  range  of  prices  per  100  pounds. 


1913 


12. 05-12. 35 

1.9&-  2.31 
1.96-2.35 

1.98-  2.30 
2.0&-  2.20 

2.05 
2.00-  2.35 
2.  OS-  2. 32 
2.06-2.35 

1.95-  2.22 

2.29-2.35 
2. 10-  2. 50 
2.  OR-  2.35 
2.06-  2.38 
2.20-2.28 
2.21-  2.48 

2. 1^  2. 22 

2. 15-  2. 26 
2.35-  2.45 
2. 17-  2. 37 
2. 24-  2. 32 

2. 16-  2. 52 
2. 28-  2. 51 
2. 45-  2. 62 
2.41-  2.82 
2. 65-  2.  75 

2.93 
2.60-2.85 

2.70 
2.84 


1914 


S2. 02-12. 25 

1. 96-  2. 36 
2.00-  2.41 

1.98-  2.30 

2.04-  2.28 

2. 05-  2. 15 

1.96-  2.29 
2. 08-  2. 18 
2.00-2.29 

1.95-  2.22 

2. 20-  2. 47 
2.30-  2.45 
Z  20-  2.40 
2.  Z-v-  2. 50 

2.21-  2.36 
2.26-  2.35 

2. 10-  2. 40 

2. 10-  2. 32 

2.35 


2. 19-  2. 26 
2.10-  2.44 
2. 16-  2. 64 
2. 31-  2. 74 
2.22-2.84 

2. 53-  2.  75 
2. 86-  3. 01 
2.75-2.88 

2. 54-  2.  70 
2.60-  2.89 


1915 


I1.97-JZ26 

1. 96-  2. 21 
1.98-2.35 

1.98-  2.30 
2.06-  2.26 

2.03-  2.19 
2. 00-  2. 29 
2.02-2.18 

1.99-  2.28 

1.90-  2.38 

2.18-  2.45 
2. 10-  2. 40 
2. 10-  2. 40 
2. 10-  2. 37 

2. 20-  2. 31 
2. 27-  2. 40 

2.00-2.30 

2. 10-  2. 30 

2. 33-  2. 38 

2.06 

2. 21-  2. 24 
Z  10-  2. 42 
2. 14-  2. 52 
2.29-2.43 
2. 26-  2.  74 
2.53-2.83 
2.82-  3.17 
2. 50-  2. 85 

2.45 
2. 50-  2. 90 


1916 


January- 
March. 


$2.17-$2.30 

2.16-2.31 
2. 10-  2. 31 

2.06-  2.18 
2.28 


April-June. 


1.9^  2.3S 

2.63 

2. 10-  2. 46 

2.06-  2.40 

2.43-  2.47 

2.33-  2.34 

2.50 


$2.37 

$2.30-  2.61 
2.09-3.27 

2.08-  3.16 
2.34 

Z50 
2.25-2.84 


2. 17-  2. 72 

2.30-3.00 
2.46 


2.06-  3.50 

2.25-  2.66 

2.61-  3.01 
2.25 
2.70 


2.40-  2.60 

2.37-  2.66 
2.61-  2.62 
2.70-2.80 


2.56 

2. 38-  2. 49 

2.50 


2.54 


2.71 
2.64-  2.88 


2.66 

2.67 

3.0O-3.13 


2.70 


On  contracts  for  100  tons  to  999  tons,  inclusive,  of  news-print 
paper  there  was  little  movement  in  the  general  level  of  prices  be- 
tween 1913  and  1915.  There  was  a  distinct  increase  during  the  first 
quarter  of  1916,  followed  by  a  greater  increase  during  the  second 
quarter.  In  fact  the  minimum  prices  of  the  second  quarter  of  1916 
were  higher  in  most  cases  than  the  maximum  prices  of  1916.    How- 


ever, the  number  of  contracts  made  during  the  first  six  months  of 
1916  was  relatively  small. 

Comparing  the  range  of  prices  in  the  second  quarter  of  1916  with 
the  range  in  1915,  the  most  noticeable  increases  were  as  follows :  In 
New  York  and  New  Jersey,  grouped  together,  the  range  was  from 
$1.98  to  $2.35  in  1915,  and  from  $2.09  to  $3.27  in  the  second  quarter 
of  1916;  in  Illinois  the  range  was  from  $1.99  to  $2.28  in  1915,  and 
from  $2.06  to  $3.50  in  the  second  quarter  of  1916 ;  in  Pennsylvania, 
Delaware,  and  Maryland,  grouped  together,  the  range  was  from 
$1.98  to  $2.30  in  1915,  and  from  $2.08  to  $3.16  in  the  second  quarter 
of  1916;  in  North  Carolina  the  range  was  from  $2.18  to  $2.45  in 
1915,  and  from  $2.61  to  $3.01  in  the  second  quarter  of  1916;  in 
Michigan  and  Wisconsin,  grouped  together,  from  $1.90  to  $2.38  in 
1915,  and  from  $2.25  to  $2.66  in  the  second  quarter  of  1916 ;  in  Ohio 
and  Indiana,  grouped  together,  from  $2  to  $2.29  in  1915,  and  from 
$2.25  to  $2.84  in  the  second  quarter  of  1916 ;  in  Nebraska  from  $2.10 
to  $2.42  in  1915,  and  from  $2.54  to  $2.88  in  the  second  quarter  of 
1916;  in  Massachusetts,  Rhode  Island,  and  Connecticut,  grouped 
together,  from  $1.96  to  $2.21  in  1915,  and  from  $2.30  to  $2.61  in  the 
second  quarter  of  1916 ;  in  Montana  from  $2.53  to  $2.83  in  1915,  and 
from  $3  to  $3.13  in  the  second  quarter  of  1916 ;  in  Iowa  from  $2  to 
$2.30  in  1915,  and  from  $2.37  to  $2.66  in  the  second  quarter  of  1916 ; 
find  in  Missouri  from  $2.10  to  $2.30  in  1915,  and  from  $2.51  to  $2.62 
in  the  second  quarter  of  1916. 

Range  of  prices  on  contracts  for  less  than  loo  tons. — Contract 
prices  for  roll  paper  for  less  than  100  tons  in  carload  lots  ranged 
at  a  somewhat  higher  level  than  the  prices  on  contracts  involving 
larger  tonnages. 

During  the  period  1913  to  1915,  inclusive,  there  was  little  change 
in  the  general  level  of  prices  on  contracts  covering  such  tonnage. 
On  contracts  made  during  the  first  quarter  of  1916,  however,  there 
was  some  increase  in  prices.  Very  few  contracts  were  made  during 
the  second  quarter  of  1916,  but  some  of  these  were  at  considerable 
increases  in  price.  As  already  stated,  a  number  of  small  publishers 
whose  contracts  expired  during  this  period  could  not  secure  new 
contracts,  and  were  compelled  to  purchase  their  paper  at  market 
prices. 

Prices  on  contracts  covering  deliveries  in  i917. — During  the 
second  half  of  1916  contract  prices  continued  to  advance.  Contracts 
to  cover  the  year  1917  were  made  by  domestic  and  Canadian  manu- 
facturers at  prices  ranging  from  $2.50  to  $3.50  per  100  pounds  f .  o.  b. 
mill,  most  of  the  renewals  being  above  $3.  This  represented  an  in- 
crease in  the  minimum  of  65  cents  and  in  the  maximum  of  $1.50  per 
100  pounds  over  the  prices  of  1915,  which  ranged  from  about  $1.85 
to  about  $2  at  the  mill. 


64 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


I 


In  some  cases  contracts  were  made  to  cover  deliveries  in  1917  at 
$4.50  f.  o.  b.  mill,  an  advance  of  from  $2.50  to  $2.65  per  100  pounds. 

Low,    HIGH,    AND    AVERAGE    PRICES    ON    CONTRACTS    FOR    100    TONS    OR 

OVER. — In  order  to  show  whether  the  major  part  of  the  contract  ton- 
nage was  sold  at  prices  approximating  the  minimum  or  the  maxi- 
mum prices  in  the  preceding  tables  a  tabulation  has  been  made  show- 
ing for  certain  cities  the  lowest,  highest,  and  weighted  average 
prices  of  all  contracts  with  publishers  for  100  tons  or  more  of  news- 
print paper  in  rolls  during  the  period  1912-1916.  This  table  is  given 
below : 

Table  U.— LOWEST,  HIGHEST,  AND  AVERAGE  PRICES  ON  CONTRACTS  WITH  PUB- 
LISHERS  FOR  100  TONS  OR  OVER  OF  NEWS-PRINT  PAPER  IN  ROLLS,  BY  CITIES, 
1912-1916  (FIRST  HALF). 


City. 


Boston,  Mass.i . . . , 
New  York,  N.  Y.> 
Philadelphia,  Pa.» 
Columbus,  Ohio*. 

Chicago,  111.1 

Kilwaukee,  Wis.». 
Kansas  City,  Mo.», 
New  Orleans,  La.» 


Date  of  signing  contract  and  price  per  100  pounds,  f.  o.  b.  cars  or 
sidewalk  at  destination. 


1912 


Low- 
est. 


S2.08 
2.00 
2.05 
2.11 
2.09 
2.05 
2.18 
2.18 


High- 
est. 


$2.30 
2.25 
2.25 
2.20 
2.25 
2.10 
2.30 
2.25 


Aver- 
age. 


$2.11 
2.13 
2.15 
2.17 
2.20 
2.07 
2.28 
2.21 


1913 


Low- 
est. 


$2.05 
2.00 
2.03 
2.01 
2.05 
2.05 
2.12 
2.18 


High- 
est. 


$2.25 
2.25 
2.25 
2.05 
2.25 
2.27 
2.20 
2.33 


Aver- 
age. 


$2.08 
2.11 
2.08 
2.04 
2.13 
2.09 
2.19 
2.26 


1914 


Low- 
est. 


$2.00 
2.00 
2.07 
2.00 
2.03 
2.05 
2.10 
2.25 


High- 


$2.20 
2.20 
2.18 
2.05 
2.15 
2.08 
2.15 
2.28 


Aver- 
age. 


$2.04 
2.09 
2.13 
2.03 
2.13 
2.06 
2.12 
2.27 


City. 


Boston,  Mass.i 

New  York,  N.  Y.» 
Philadelphia,  Pa.» 
Columbus,  Ohio*. 

Chicago,  m.i 

Milwaukee,  Wis.«. 
Kansas  City,  Mo.» 
New  Orleans,  La.» 


Date  of  signing  contract  and  price  per  100  pounds,  f.  o.  b.  cars  or 
sidewalk  at  destination — Continued. 


1915 


Low- 
est. 


$2.02 
2.00 
2.08 
2.00 
L98 
1.95 
2.10 
2.21 


High- 
est. 


$2.15 
2.20 
2.18 
2.01 
2.19 
2.10 
2.13 
2.25 


Aver- 
age. 


$2.08 
2.09 
2.08 
2.00 
2.03 
1.99 
2.11 
2.22 


1916 


January-March. 


Low- 
est. 


$2.18 
2.00 
2.10 
2.04 
2.14 
2.08 


2.40 


High- 
est. 


$2.18 
2.15 
2.15 
2.04 
2.14 
2.08 


2.40 


Aver- 
age. 


$2.18 
2.11 
2.13 
2.04 
2.14 
2.08 


2.40 


April-June. 


Low- 
est. 


$2.25 


«2.08 
2.40 
2.74 
2.30 
2.49 
2.58 


High- 
est. 


$2.25 


«2.08 
2.40 
2.78 
2.30 
2.51 
2.58 


Aver- 
age. 


$2.25 


«2.08 
2.40 
2.75 
2.30 
2.50 
2.58 


1  F.  0.  b.  sidewalk  at  destination. 

•  Executed  on  May  9,  1916,  but  effective  as  of  Jan.  1,  1916. 

*  F.  o.  b.  cars  at  destination. 

The  table  shows  that  in  most  years  the  average  prices  approxi- 
mated more  closely  to  the  lowest  prices  than  to  the  highest.  This 
was  especially  true  in  1915  and  1916.    This  results  from  the  fact  that 


PRICES  OF   NEWS-PRINT  PAPER. 


65 


contra,cts  for  a  large  tonnage  are  usually  made  at  lower  prices  than 
those  for  a  smaller  tonnage. 

There  was  a  slight  decrease  in  average  prices  in  1915  as  compared 
with  1912  in  all  the  cities  shown,  except  New  Orleans,  where  there 
was  an  increase  of  1  cent  per  100  pounds.  The  average  prices  in  the 
first  quarter  of  1916  increased  over  the  average  prices  in  1915  in  all 
of  the  cities  shown,  the  largest  increase  being  18  cents  per  100  pounds 
in  New  Orleans.  In  the  second  quarter  of  1916  the  increase  in  the 
average  prices  over  1915  prices  was  much  larger,  except  for  Phila- 
delphia. The  largest  increase  was  in  Chicago,  amounting  to  72  cents 
per  100  poimds. 

Contracts  in  force  September  i,  i9i6. — The  preceding  tables  show 
that  prices  on  contracts  made  during  the  first  quarter  of  1916  ad- 
vanced to  some  extent  over  prices  on  contracts  made  prior  to  January 
1,  1916,  and  that  contracts  made  during  the  second  quarter  of  1916 
showed  still  further  increases  in  price. 

The  number  of  contracts  and  the  tonnage  covered  by  those  that 
were  made  during  these  periods  for  an  annual  supply  of  100  tons  and 
over  and  which  were  in  force  on  September  1,  1916,  are  shown  by 
Table  12  below.  Contracts  are  shown  separately  for  paper  from 
mills  in  the  eastern  United  States  district,  the  Canadian  district,  and 
the  north  central  United  States  district.  The  eastern  United  States 
district  includes  mills  in  New  York  and  the  New  England  States ;  the 
Canadian  district  includes  mills  in  Quebec  and  Ontario;  and  the 
north  central  United  States  district  includes  mills  in  Michigan,  Wis- 
consin, and  Minnesota. 

Contracts  for  paper  from  mills  on  the  Pacific  coast  are  not  shown. 
It  is  sufficient  for  this  district  to  state  that  nearly  all  of  these  contracts 
were  made  prior  to  September  1,  1915. 

Table  12.— DATES  OF  SIGNING  CONTRACTS  WITH  PUBLISHERS  FOR  100  TONS  OR  OVER 
OF  NEWS-PRINT  PAPER.  IN  FORCE  ON  SEPT.  1.  1916. 


Date  of  signing  contract. 


Prior  to  Sept.  1,1915 

September-December,  1915. 
Total,  prior  to  Jan.  1. 1916.. 

J  anuary-March,  1916 

Total,  prior  to  Apr.  1, 1916. 

April-June,  1916 

July-August,  1916 


Grand  total . 


Eastern  United  States  (339 
contracts).! 


Number 
of  con- 
tracts. 


49 
159 
208 

58 
266 

56 
17 


Annual 
tonnage. 


224,299 
237,394 
461,693 

104,162 
665,855 

43,993 
18,221 


628,069 


Per  cent 

of 
tonnage. 


35.7 
37.8 
73.5 

16.6 
90.1 

7.0 
2.9 


100.0 


Canada  (86  contracts).* 


Number 
of  con- 
tracts. 


19 
31 
50 

15 
65 

17 

4 


Annual 
tonnage. 


87,962 

50,518 

138, 488 

5d,190 
188,670 

49,277 
4,045 


241,992 


Per  cent 

of 
tonnage. 


36.3 
20.9 
57.2 

20.8 
78.0 

20.3 
1.7 


100.0 


^  Includes  mills  in  New  York  and  the  New  England  States. 

» Includes  mills  in  Quebec  and  Ontario  with  exception  of  the  Fort  Frances  mill  of  the  Minnesota  & 
Ontario  Power  Co.  in  western  Ontario. 

88669'— 17 5 


BW311ll!Si'''iTi..''  '''"■'-a 


^'-'SSaaaaaaaifa..,, 


66 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


Table  12.— DATES  OF    SIGNING   CONTRACTS  WITH   PUBLISHERS  FOR  100  TONS  OR 
OVER  OF  NEWS-PRINT  PAPER,  IN  FORCE  ON  SEPT.  1,  1916— Continued. 


Date  of  signing  contract. 


Prior  to  Sept.  1, 1915 

September-December,  1915. 
Total,  prior  to  Jan.  1, 1916.. 

January-March,  1916 

Total,  prior  to  Apr.  1, 1916. 

April-June,  1916 

July-August,  1916 


Grand  total . 


N(xth  central  United  States 
(75  contracts).' 


Number 
of  con- 
tracts. 


28 
19 
45 

12 

67 

15 
3 


Annual 
tonnage. 


33,885 
24,07t 
57,055 

21,707 
78,662 

16,025 
846 


•5,527 


Per  cent 

of 
tonnage. 


35.4 
25.2 
60.6 

21.7 
82.3 

16.8 
.9 


100.0 


Total  (500  contracts).* 


Number 
of  con- 
tracts. 


94 
209 
308 

85 
388 

88 
24 


Annual 
tonnage. 


346,146 
311,982 
658,128 

175,059 
833,187 

109.295 
23,106 


965,588 


Per  cent 

of 
tonnage. 


35.9 
32.3 
68.2 

18.1 
86.3 

11.3 
2.4 


100.0 


» Includes  mills  in  the  States  of  Michigan,  Wisconsin,  and  Minnesota,  and  the  Fort  Francis  mill  of  the 
Minnesota  &  Ontario  Power  Co.  in  western  Ontario. 
*  Covers  mills  in  the  United  States  and  Canada,  except  those  on  the  Pacific  coast. 

It  will  be  seen  that  the  greater  part  of  the  tonnage  shown  in  each 
of  the  districts  was  under  contracts  made  prior  to  January  1,  1916, 
when  prices  were  low. 

In  the  eastern  United  States  district,  73.6  per  cent  of  the  total 
tonnage  shown  was  under  contracts  made  prior  to  January  1,  1916; 
16.6  per  cent  under  contracts  made  during  the  first  quarter  of  1916 ; 
and  7  per  cent  on  contracts  made  during  the  second  quarter  of  1916. 
Corresponding  figures  for  the  Canadian  district  are  57.2  per  cent, 
20.8  per  cent,  and  20.3  per  cent.  For  the  north  central  district  they 
are  60.6  per  cent,  21.7  per  cent,  and  16.8  per  cent. 

The  mills  in  the  Canadian  and  the  north  central  United  States  dis- 
tricts had  under  contracts  made  during  the  first  six  months  of  1916 
a  larger  proportion  of  their  total  tonnage  shown  than  did  the  mills 
in  the  eastern  United  States  district. 

For  the  three  districts  combined,  68.2  per  cent  of  the  total  tonnage 
shown  was  on  contracts  made  prior  to  January  1,  1916;  18.1  per  cent 
on  contracts  made  during  the  first  quarter  of  1916 ;  and  11.3  per  cent 
on  contracts  made  during  the  second  quarter  of  1916. 

For  the  same  three  districts  combined,  contracts  in  force  on  Sep- 
tember 1,  1916,  covering  56.1  per  cent  of  the  total  tonnage  shown, 
expired  prior  to  January  1,  1917,  of  which  49.5  per  cent  expired  on 
December  31,  1916. 

So  large  a  proportion  of  low-priced  contracts  expiring  during  the 
fall  of  1916  indicated  that  during  1917  renewed  contract  tonnage 
would  have  to  bear  a  greater  proportion  of  the  increase  in  price,  and 
that  there  would  not  be  so  great  a  disparity  between  prices  on  ship- 
ments of  contract  and  current  paper  as  occurred  during  the  last 
half  of  1916. 


PRICES  OF   NEWS-PRINT  PAIPEB. 


67 


Section  4.  Average  receipts  per  100  pounds  at  mill. 

The  changes  that  have  occurred  since  January  1,  1913,  in  the 
average  receipts  per  100  pounds  of  manufacturers  from  the  sale  of 
news-print  paper  are  shown  by  Table  13  below.  The  averages  in- 
clude all  sales,  both  contract  and  market,  and  those  to  jobbers  as 
well  as  those  to  publishers.  They  also  include  sales  in  Canada  and 
other  foreign  countries. 

The  various  mills  included  in  the  averages  have  been  grouped  ac- 
cording to  location  into  five  districts,  designated  in  the  table  below 
as  New  England,  New  York,  Canada,  north  central  United  States, 
and  the  Pacific  coast.  The  north  central  United  States  district  in- 
cludes, in  addition  to  the  news-print  mills  in  Wisconsin  and  Minne- 
sota, a  western  Ontario  mill.  The  Pacific  coast  district  includes  1 
mill  in  British  Columbia  in  addition  to  those  in  the  United  States. 

For  the  New  York  and  the  New  England  mills  approximately 
86  per  cent  of  the  news  print  produced  during  the  period  covered 
by  the  table  was  sold  under  annual  contracts.  The  market  fluctua- 
tions in  the  case  of  these  mills  as  well  as  those  of  the  Pacific  coast 
where  long-term  contracts  prevail  are  less  quickly  reflected  in  the 
trend  of  average  receipts  at  the  mill  than  in  the  case  of  the  north 
central  United  States  and  the  Canadian  mills,  which  had  a  larger 
proportion  of  transient  business,  and  also  a  larger  proportion  of 
tonnage  under  contracts  renewed  during  the  first  half  of  1916. 
The  average  receipts  per  100  pounds  at  the  mill  were  obtained  by 
dividing  the  total  receipts,  less  freight,  drayage,  and  discounts,  by 
the  total  tonnage  shipped  in  each  period. 

Table  13.— AVERAGE    RECEIPTS  PER  100  POUNDS  OF  NEWS-PRINT  PAPER  AT  MILL 
ON  SHIPMENTS,  BY  DISTRICTS    1913-1916  (FIRST  HALF). 


Period  of  shipment. 


New  England. 


Num- 
ber of 
mills. 


1913 

1914 

1915 

1916  (first  halO 

January-June,  1916; 

January 

^'ebruary 

March 

April 

May 

June. 


8 
10 
10 
10 

10 
10 
10 
10 
10 
10 


Shipped. 


Aver- 
age re- 
ceipts 
perlOO 
pounds. 


Tons. 
367,358 
405,144 
410,165 
220,944 

35,639 
34,160 
36,838 
38,110 
38,364 
37,833 


SI.  91 

1.87 
1.88 
1.80 

1.87 
1.89 
1.89 
1.90 
1.91 
1.91 


New  York. 


Num- 
ber of 
mills. 


Shipped. 


12 
12 
12 
12 

12 
12 
12 
12 
12 
12 


Tons. 
339,500 
344,237 
322, 116 
175,444 

27,077 
25,503 
31,968 
29,512 
29,706 
31,678 


Aver- 
age re- 
ceipts 
perlOO 
pounds. 


Canada. 


SI.  96 
1.94 
1.92 
L98 

1.94 
1.94 
1.96 
L97 
2.01 
2.05 


Num- 
ber of 

mills. 


7 

8 
9 
9 

9 
9 
9 
9 

8 
8 


Shipped. 


Tons. 
213,303 
303,800 
336,472 
193,344 

30,154 
32,768 
33,886 
33,805 
31,367 
31,444 


Aver- 
age re- 
ceipts 
per  160 
pounds. 


SI.  88 
1.85 
1.82 
1.85 

1.81 
1.82 
1.84 
L86 
1.88 
1.92 


J 


I     m 


_.-;  -^  ■*,  .i.-J  5L¥J«fes^\'»aM«'|ffi^;i="JI»ir  J; 


68 


PRICES  OF    NEWS-PRINT  PAPER. 


REPORT   ON    NEWS-PRINT  PAPER   INDUSTRY. 


69 


Table  13. -AVERAGE  RECEIPTS  PER  100   POUNDS   OF    NEWS-PRINT    PAPER  Al   MILL 
ON  SHIPMENTS,  BY  DISTRICTS,  1913-1916  (FIRST  HALF)-Contlnued. 


Period  of  shipment. 


1913 

1914 

1915 

1916  (first  half) 

January-June,  1916: 

January 

February 

March 

AprU 

May 

June 


North  central  United 
States. 


Pacific  coast. 


Num- 
ber of 
mills. 


Shipped 


Toru. 
130,986 
160,807 
187,262 
106,110 

17,703 
17,102 
18,463 
16,S98 
18,380 
17,564 


Aver- 
age re- 
ceipts 
per  100 
pounds. 


12.03 
1.97 
1.95 
2.04 

1.96 
1.9t 
1.98 
2.03 
2.08 
2.18 


Num- 
ber of 
mills. 


Shipped. 


Tom. 
117,330 

125,561 

131,318 

81,797 

11,310 
11,890 
12,863 
17,764 
13,656 
14,314 


Aver- 
age re- 
ceipts 
per  100 
pounds. 


$2.20 
2.17 
2.13 
2.15 

2.17 
2.04 
2.19 
2.11 
2.21 
2.21 


Comparing  the  average  receipts  per  100  pounds  at  mill  in  the 
different  districts  for  the  period  1913-1915,  inclusive,  it  is  seen  that 
the  lowest  averages  were  received  by  the  mills  in  the  Canadian  dis- 
trict, the  range  being  from  $1.82  to  $1.86  per  100  pounds.  Next  in 
order  came  the  New  England  district  with  a  range  from  $1.87  to 
$1.91;  then  the  New  York  district  with  a  range  from  $1.92  to  $1.96; 
then  the  north  central  United  States  district  with  a  range  from 
$1.95  to  $2.03 ;  and  finally  the  Pacific  coast  district  with  the  highest 
prices,  from  $2.13  to  $2.20.  All  districts  maintained  the  same  rank 
during  the  first  six  months  of  1916. 

There  was  a  slight  decline  in  average  receipts  at  mill  in  1915  as 
compared  with  1913  in  all  the  districts.    The  greatest  decrease  was 

8  cents  per  100  pounds  in  the  north  central  United  States  district,  the 
receipts  in  1913  being  $2.03  while  in  1915  they  were  $1.95.  The 
smallest  decrease  was  3  cents  per  100  pounds  in  the  New  England  dis- 
trict, the  receipts  in  1913  being  $1.91  while  in  1915  they  were  $1.88. 
The  receipts  declined  4  cents  per  100  pounds  in  both  the  New  York 
and  Canadian  districts,  and  7  cents  per  100  pounds  in  the  Pacific 
coast  district. 

The  average  receipts  for  the  first  six  months  of  1916  increased 
slightly  over  those  in  1915  in  all  districts.    The  largest  increase  was 

9  cents  per  100  pounds  in  the  north  central  United  States  district, 
the  average  increasing  from  $1.95  in  1915  to  $2.04  in  the  first  six 
months  of  1916.  The  smallest  increase  was  1  cent  per  100  pounds  in 
the  New  England  district,  the  receipts  increasing  from  $1.88  in 
1915  to  $1.89  for  the  first  six  months  of  1916.  The  increases  in  the 
other  districts  were  2  cents  per  100  pounds  in  the  Pacific  coast  dis- 
trict, 3  cents  in  Canada,  and  6  cents  in  New  York. 


Taking  the  first  half  of  1916  by  months,  the  greatest  increase  in 
average  receipts  per  100  pounds  was  in  the  north  central  United 
States  district,  where  the  average  of  $1.96  per  100  pounds  in  Janu- 
ary increased  to  $2.18  in  June,  an  increase  of  22  cents  per  100 
pounds.  The  smallest  increase  during  this  period  was  in  the  New 
England  district,  where  the  average  receipts  increased  from  $1.87 
in  January  to  $1.91  in  June,  an  increase  of  4  cents  per  100  pounds. 
The  increase  in  both  New  York  and  Canada  was  11  cents  per  100 
pounds. 

The  small  increase  in  the  average  receipts  of  manufacturers  dur- 
ing the  first  half  of  1916,  when  prices  were  rising,  is  due  to  the  fact 
that  the  great  bulk  of  the  tonnage  was  being  delivered  on  contracts 
made  before  the  rise  in  price  began. 

Section  5.  Effect  of  contract  system  on  prices. 

Ordinarily  a  great  increase  in  the  price  of  any  commodity  is 
accompanied  by  a  decrease  in  consumption.  The  increase  in  the 
price  of  paper  during  the  first  half  of  1916,  however,  had  only  a 
slight  effect  on  the  total  consumption,  as  nearly  all  the  large  pub- 
lishers were  protected  by  low-priced  contracts,  which  in  most  cases 
still  had  six  months  or  more  to  run  and  the  increased  price  did  not 
affect  them.  Moreover,  the  few  who  did  sign  new  contracts  at  the 
higher  prices  were  unable  to  reduce  their  consumption  to  any  great 
extent,  because  in  most  cases  their  competitors,  who  were  still  getting 
paper  at  the  old  prices,  were  not  disposed  to  curtail  their  consump- 
tion. 

The  fact  that  most  of  the  contracts  gave  the  publishers  a  leeway 
of  from  5  to  10  per  cent  above  or  below  the  tonnage  fixed  as  their 
ordinary  requirements  increased  the  tendency  of  the  contract  system 
to  make  consumption  independent  of  price  changes.  Due  to  their 
increased  need,  most  of  the  publishers  demanded  the  maximum  ton- 
nage under  their  contracts.  When  this  did  not  satisfy  their  require- 
ments they  went  into  the  open  market.  This,  of  course,  largely  de- 
creased the  proportion  of  paper  that  would  have  been  available  for 
purchasers  on  current  orders  or  on  new  contracts.  The  result  was  to 
make  the  prices  to  these  latter  purchasers  very  high,  which  in  turn 
tended  toward  higher  prices  for  contract  renewals. 

Section  6.  Additional  cost  of  paper  to  publishers  in  1917. 

The  prices  of  contracts  made  at  the  close  of  1916  generally  ranged 
from  $2.50  to  $3.50  f.  o.  b.  mill,  the  majority  being  $3  or  above, 
which  represented  an  advance  to  publishers  of  65  cents  in  the  mini- 
mum and  of  $1.50  in  the  maximum  per  100  pounds.  In  some  cases 
contracts  were  made  in  December,  1916,  at  $4.50  f.  o.  b.  mill,  an 
advance  of  from  $2.50  to  $2.65  per  100  pounds.    What  this  advance 


70 


REPOBT  ON   NEWS-PKINT  PAPEK  INDUSTRY. 


PEICES  OF  NEWS-PBINT  PAPER. 


71 


f^ 


in  price  will  mean  to  publishers  during  the  year  1917  is  indicated 
by  the  following  computation,  which  shows  the  increase  in  the  cost 
of  paper  for  certain  newspapers  using  various  tonnages.  Freight 
and  cartage  charges  were  added  to  the  1917  prices  to  put  them  on 
the  same  basis  as  the  1916  prices. 


Increase  In 

Increase  in 

amount  to  be 

amount  to  be 

Tonnage 

paid  during 

Tonnage 

paid  during 

con- 

1917 as  com- 

con- 

1917 as  com- 

tracted 

pared  with 
tnat  paid  in 

tracted 

pared  with 
that  paid  in 
1916  for  the 

for,  1917. 

for,  1917. 

1916  for  the 

same  tonnage. 

same  tonnage. 

135 

J2,983 

5,040 

$166,320 

240 

4,800 

6,000 

143,460 

600 

13,800 

6,000 

313,560 

900 

21,780 

7,200 

164,160 

1,200 

27,360 

8,500 

193,800 

2,000 

46,800 

30,000 

674,400 

6,000 

114,000 

Information  obtained  by  the  Commission  indicates  that  this  in- 
crease in  paper  cost  will  generally  exceed  the  annual  profits  of  these 
publications  and  in  some  cases  will  be  several  times  the  profits  made 
in  any  one  year.  If  publications  are  considered  which  had  contracts 
in  1915  but  have  been  forced  to  buy  in  the  open  market  since  their 
contracts  expired  the  increase  in  paper  cost  will  be  considerably 
larger  in  proportion  to  the  tonnage  used  than  for  those  newspapers 
shown  above. 

In  addition  to  the  greatly  increased  prices  of  contracts  covering 
1917,  certain  additional  burdens  and  expenses  must  be  borne  by 
publishers  as  a  result  of  changes  made  in  the  provisions  of  the 

contracts.    (See  p.  56.) 

In  attempting  to  meet  the  increased  cost  of  news  print  the  pub- 
lishers have  recourse  to  (1)  cutting  out  unpaid  subscriptions  and 
returns  from  agents;  (2)  reducing  the  size  of  their  paper  by  cutting 
out  either  news  or  advertising  matter  or  both;  (3)  raising  the  price 
of   subscriptions   and   street   sales;   or    (4)    raising   the   rates   for 

advertising. 

While  these  methods  may  be  employed  for  a  time  without  loss  of 
revenue,  if  they  are  pursued  beyond  a  certain  point  and  for  any 
length  of  time  they  may  result  in  reduced  receipts  from  sales  and 

advertising. 

Moreover,  it  is  not  possible  in  all  cases  to  increase  sales  prices  and 
advertising  rates  owing  to  competition  from  publishers  who  have 
unexpired  contracts  for  paper  at  low  prices,  or  have  their  own  mills 
and  who  are  thereby  able  to  maintain  low  sales  prices  and  advertising 
rates. 


Section  7.  Disparity  in  prices  among  publishers. 

The  rapid  advance  in  the  price  of  news  print  during  1916,  coupled 
with  the  contract  system,  has  resulted  in  a  great  disparity  in  prices 
paid  by  different  publishers  in'  the  same  locality  for  paper  delivered 
during  the  latter  part  of  the  year.  For  example,  publishers  in  the 
eastern  and  middle  western  groups  of  States  who  had  contracts 
still  in  force  that  were  made  in  1915  were  getting  their  paper  in 
December,  1916,  at  about  $2  to  $2.20  f.  o.  b.  destination,  while  pub- 
lishers in  the  same  localities  whose  contracts  were  renewed  after 
September,  1916,  were  paying  from  $2.65  to  $3.65  and  in  some  cases 
even  $4.65  f.  o.  b.  destination  for  paper  delivered  the  same  month. 
Many  publishers  whose  contracts  had  expired  and  could  not  be 
renewed  were  forced  to  go  into  the  open  market  and  to  pay  from  $5.15 
to  $6.15  f.  o.  b.  destination  in  carload  lots  for  December  deliveries. 

The  result  has  been  that  some  of  the  publishers  paying  the  higher 
prices  have  been  put  at  a  distinct  disadvantage  as  compared  with 
their  competitors  who  were  getting  paper  at  the  lower  prices. 
Inasmuch  as  many  of  the  old  low-priced  contracts  run  over  well  into 
1917,  this  condition  will  continue  for  some  time  in  certain  localities. 

In  this  connection  a  New  Jersey  publisher  made  the  following 
statement : 

The  matter  of  discrepancy  in  price  is  one  that  concerns  the 
papers  of  the  country  even  more  than  the  large  increase,  because 
it  puts  one  at  a  tremendous  disadvantage  with  another.  For 
instance,  one  paper  in  a  town  I  heard  of  last  night  is  paying 
$2.25  when  a  competitor  is  paying  $6. 

The  publisher  of  a  daily  paper  in  one  of  the  smaller  cities  in  New 
York  stated  that  he  was  paying  $5  per  100  pounds  for  news  print 
while  his  competitor  was  paying  $2.66  on  a  contract  that  would  not 
expire  until  April  or  May,  1917. 

The  disparity  between  the  prices  paid  by  country  weeklies  and  city 
dailies  is  much  greater  at  present  than  was  the  case  in  1915.  In 
1915  the  country  weeklies  were  paying  $3  or  less  per  100  pounds, 
while  city  dailies  were  renewing  contracts  at  from  $2  to  $2.15  f.  o.  b. 
destination,  a  difference  of  1  cent  per  pound  or  less.  In  December 
1916,  however,  the  country  weeklies  were  paying  between  $6.50  and 
$7.50  per  100  pounds,  while  most  of  the  city  dailies  were  renewing 
contracts  at  from  $2.50  to  $3.50,  although  in  some  cases  renewals  were 
made  as  high  as  $4.50  f .  o.  b.  mill. 

A  representative  of  the  smaller  publishers  made  the  following 
statement  in  December,  1916 : 

♦  ♦  *  There  never  has  occurred,  with  respect  to  the  country 
papers,  a  condition  so  serious  as  that  which  now  confronts  them. 
They  are  facing  a  situation  which,  if  continued,  will  mean  ruin 


|t  ||i 


72  REPORT   ON    NEWS-PRINT  PAPER   INDUSTRY. 

to  many  men  who  have  been  conducting  fairly  prosperous  busi- 
ness concerns. 

•  ♦••♦♦• 

It  so  happens  that  the  alarming  advance  in  the  price  of  news 
print  and  other  papers  falls  more  heavily  upon  the  country 
papers  than  those  published  in  the  cities,  because  they  buy  in 
smaller  quantities  and  the  advance  in  prices  has  been  much 
greater  to  them  than  to  those  who  buy  m  large  lots  and  have 
contracts  for  large  supplies. 

•     «  *  *  •  •  ♦  ♦ 

• 

Complaints  are  made  by  the  country  publishers  of  discrimina- 
tion against  them,  a  greater  discrimination  than  is  warranted 
by  the  fact  that  they  purchase  in  smaller  quantities,  the  dif- 
ferences between  the  prices  paid  by  the  country  and  city  papers 
now  being  so  much  greater  than  two  years  ago.     One  publisher 
inquires  why  he  should  pay  $7  per  100  for  paper  while  daily 
papers  in  the  larger  cities  are  getting  paper  at  $3.25  per  100. 
The  disparity  in  prices  in  the  same  localities  is  one  of  the  diffi- 
culties confronting  publishers  in  1917.     The  big  increase  in  the  prices 
of  contracts  made  for  1917  deliveries  reduced  somewhat  the  disparity 
between  them  and  open-market  prices,  and  the  softening  of  the 
market  which  has  occurred  since  January  1,  1917,  has  still  further 
reduced  this   disparity.    Among  the   publishers  having  contracts 
there  also  exists  a  considerable  variation  in  prices.     Some  publishers 
have  contracts  which  run  through  or  partially  through  the  year 
1917  at  $2  or  less  f.  o.  b.  mill;  others  have  contracts  renewed  around 
$2.50.    A  few  are  renewing  at  $4  or  $4.50  per  100  pounds.    This 
disparity  in  prices  which  will  continue  through  1917  adds  to  the 
serious  consequences  occasioned  by  the  high  cost  of  paper. 


CHAPTER  IV. 
JOBBERS'  COMMISSIONS  AND  MARGINS  OF  GROSS  PROFIT. 

Section  1.  Introduction. 

In  this  chapter  are  shown  the  gross  profits  obtained  by  the  prin- 
cipal paper  jobbers  and  selling  agents  on  sales  of  news-print  paper 
in  1916  and  one  or  more  prior  years. 

These  gross  profits  are  shown  in  the  form  of  percentages  on  the 
cost  price  to  the  jobbers  for  merchandising  or  buy-and-sell  transac- 
tions and  in  the  form  of  rates  of  commission  for  commission  business. 
In  the  former  case,  for  example,  paper  costing  $2  per  100  pounds  and 
sold  at  $2.25  would  show  a  margin  of  25  cents  or  12.5  per  cent  on  ihe 
cost  price.  This  margin  of  profit  is  gross,  since  it  includes  the  cost 
of  doing  business. 

Information  relative  to  the  distribution  of  news-print  paper  by 
jobbers  and  commission  merchants  was  obtained  from  dealers  in 
practically  all  the  large  commercial  centers  of  the  East,  the  Middle 
West,  and  the  Pacific  coast.  In  the  Southern  States  the  relatively 
small  number  of  dealers  handling  ijews-print  paper  were  not  visited 
by  representatives  of  the  Commission  owing  to  lack  of  time.  The 
operations  of  these  jobbers,  as  far  as  news  print  is  concerned,  are 
confined  largely  to  the  distribution  of  sheet  news  to  publishers  of 
weekly  newspapers.  The  conditions  under  which  news-print  paper 
is  bought  and  sold  by  jobbers  in  southern  territory,  it  is  believed,  are 
not  materially  different  from  the  conditions  existing  among  the  small 
jobbers  in  other  sections,  whose  records  were  examined  by  the  Com- 
mission. 

There  are  two  general  methods  of  handling  news-print  paper  by 
jobbers,  namely,  direct  shipments  from  the  mill,  and  shipments 
from  the  jobber's  own  stock.  In  the  case  of  direct  shipments  the 
paper  is  shipped  from  the  mill  directly  to  the  consumer  according 
to  instructions  furnished  by  the  jobber.  In  cases  where  the  jobber 
has  two  or  more  customers  in  the  same  locality,  their  requirements  in 
some  instances  are  combined  in  one  shipment  and  consigned  to  the 
jobber  who  delivers  the  paper  from  the  railroad  station  to  the 
consumer.  In  the  case  of  sales  from  stock  as  distinguished  from 
direct  shipments,  the  paper  is  distributed  by  the  jobber  from  his 
own  warehouse  as  orders  are  received. 

73 


74 


BEPOET  ON  NEWS-PBINT  PAPER  INDUSTRY. 


JOBBERS     COMMISSIONS  AND  MARGINS  OF  GROSS  PROFIT. 


75 


The  margins  of  profit  and  commissions  hereafter  shown  are  only 
for  transactions  involving  shipments  directly  from  the  mill  to  the 
consumer.  Commission  business  is  wholly  of  this  character,  as  are 
also  most  of  the  buy-and-sell  transactions  for  carload  lots.  In  the 
latter  case  the  purchase  and  sale  of  the  paper  by  the  jobber  are 
practically  contemporaneous  transactions,  each  usually  involving 
the  same  quantity  of  paper,  so  that  his  records  show  the  purchase 
price  and  sales  price  for  each  transaction.  Where  orders  are  fiUed 
from  stock  carried  in  the  jobber's  warehouse  or  storeroom,  the  cost 
price  is  difficult  of  ascertainment.  On  this  account  no  attempt  has 
been  made  to  secure  the  margins  of  profit  on  such  sales. 

It  should  be  noted,  also,  that  the  margins  are  based  on  trans- 
actions in  which  the  terms  of  delivery  to  the  jobber  and  publisher 
were  the  same.  For  example,  where  the  jobber  purchased  f.  o.  b. 
mill  and  sold  f.  o.  b.  destination  or  sidewalk,  the  transportation 
charges  paid  by  the  jobber  were  ascertained  and  included  in  his 
cost  price  before  the  margin  of  profit  was  computed. 

There  are  a  number  of  dealers  in  the  more  important  commercial 
centers  who  buy  and  sell  news  print  on  a  large  scale,  and  in  addition 
several  concerns  which  dispose  of  the  product  of  paper  mills  on  com- 
mission. The  news  print  handled  by  these  commission  houses  is  to 
a  large  extent  obtained  directly  from  the  manufacturer  and  is  sold, 
as  a  rule,  in  large  quantities  either  to  city  dailies  or  to  jobbers  scat- 
tered throughout  the  country.  These  jobbers  in  turn  supply  daily 
papers  of  small  circulation  and  country  weeklies.  Margins  on  sales 
by  one  jobber  to  another  are  not  included  in  this  discussion. 

The  jobbers  from  whom  information  was  obtained  have  been  ar- 
ranged according  to  location  into  three  groups  as  follows: 

(1)  Eastern  group. — The  Eastern  group  includes  the  New  Eng- 
land States,  the  States  of  New  York,  New  Jersey,  Delaware,  Mary- 
land, and  Pennsylvania.  The  figures  presented  for  this  territory  are 
based  on  data  obtained  from  an  examination  of  the  records  of  27 
dealers.  In  this  group  are  included  two  important  companies  which 
sell  the  entire  product  of  a  number  of  paper  mills  on  commission. 
Jobbing  transactions  in  this  territory  include  the  distribution  of  a 
relatively  large  volume  of  news-print  paper  to  the  metropolitan 
dailies,  at  commissions  ranging  from  2.5  per  cent  to  5  per  cent. 

(2)  Western  group, — The  Western  group  includes  States  extend- 
ing from  Ohio  as  far  west  as  the  Rocky  Mountains.  It  includes  the 
cities  of  Cincinnati,  Detroit,  Chicago,  St.  Louis,  Kansas  City,  Omaha, 
St  Paul,  and  Minneapolis,  which  are  distributing  centers  for  news 
print  produced  by  the  paper  mills  of  the  Middle  Western  States  bor- 
dering on  the  Great  Lakes  and  western  part  of  the  Province  of 
Ontario.    The  greater  part  of  the  requirements  of  weekly  newspapers 


in  this  section  is  supplied  by  jobbers.  Information  was  obtained  in 
this  territory  from  23  jobbers. 

(3)  Pdcvfic  coast  group. — The  Pacific  coast  group  includes  the 
States  west  of  the  Rocky  Mountains.  The  newspapers  of  large  cir- 
culation in  this  territory,  to  a  great  extent,  buy  paper  directly  from 
mills  of  the  Pacific  Northwest.  An  extensive  jobbing  business  is 
carried  on  in  the  larger  cities  with  publishers  of  dailies  and  weekly 
papers  in  smaller  towns.  The  data  presented  for  this  territory  are 
based  on  an  examination  of  the  records  of  seven  jobbers. 

The  information  obtained  from  the  various  jobbers  has  been  so 
arranged  as  to  show  the  margins  on  contract  and  open-market  sales 
separately. 

In  order  that  the  significance  of  the  figures  may  be  clearly  imder- 
stood,  it  is  important  to  note  that  they  represent,  in  some  cases,  only 
one  of  a  series  of  cumulative  margins  included  in  the  price  paid  by 
the  publisher  for  paper.  In  the  process  of  distribution  to  papers  of 
relatively  small  circulation  news  print,  in  some  instances,  passes 
through  the  hands  of  two  or  more  jobbers  before  reaching  the 
publisher.  The  margins  received  by  all  jobbers  in  such  cases  are 
obviously  materially  greater  in  the  aggregate  than  the  last  margin 
made  on  the  final  transfer  of  the  paper  to  the  consumer. 

It  must  be  remembered  also  that  the  margins  are  shown  by  the 
percentage  they  bear  to  the  jobbers'  cost  prices.  Therefore  as  prices 
advanced  in  1916  the  same  percentage  represented  a  larger  actual 
profit,  expressed  in  dollars  and  cents,  than  was  the  case  in  1915. 
This  is  especially  the  case  with  market  sales  where  the  advance  in 
price  was  greatest. 

Section  2.  Margins  of  profit  on  contracts. 

The  distribution  of  news-print  paper  by  more  important  jobbers, 
as  noted  in  the  preceding  chapter,  is  governed  to  a  great  extent  by 
contracts  executed  contemporaneously  with  the  manufacturer  and 
publisher.  Contract  sales  on  commission  are  negotiated  with  pub- 
lishers on  the  basis  of  terms  previously  agreed  upon  between  the 
manufacturer  and  the  commission  merchant.  In  many  cases,  how- 
ever, the  jobber  buys  and  sells  on  his  own  account,  the  difference 
in  the  prices  paid  and  received  constituting  his  margin  of  gross 
profit. 

Most  of  the  paper  sold  by  jobbers  on  contracts  is  in  rolls.  For 
that  reason  the  margins  shown  in  this  section  are  on  roll  paper  only. 
Jobbers'  commissions  and  margins  on  contracts  for  18  tons  or  over 
of  news-print  paper  in  rolls  are  shown  in  the  following  table  for  the 
years  1913, 1914,  and  1916,  and  for  the  first  half  of  1916 : 


t.  u; 


H 


76 


EEPORT  ON    NEWS-PRINT  PAPER   INDUSTRY. 


Tablb  14.— JOBBERS'  COMMISSIONS  AND  M.VRQINS,  IN  PERCENTAGES  OF  COST  PRICE, 
ON  CONTRACTS  WITH  PUBLISHERS  FOR  18  TONS  AND  OVER  OF  NEWS  PRINT  PAPER 
IN  ROLLS,  1913-1916  (FIRST  HALF). 


Date  of  signing  contract. 


Eastern: 

1913 

1914 

1915 

1916  (first  half). 
Western: 

1913 

1914 

1915 

1916  (first  half). 


Commissions. 


Tons. 


Percent. 


70,473 

106,771 

97,405 

87,050 

4,375 

9,119 

80,163 

4,390 


Low- 
est. 


1.4 
2.4 
1.5 
2.0 

1.3 
L2 
1.0 
3.0 


High- 
est. 


6.0 
5.0 
5.0 
4.5 

3.0 
3.7 
4.0 
3.0 


Aver- 
age. 


3.7 
3.3 
3.1 
3.0 

1.9 
2.7 
1.3 
3.0 


Margins. 


Tons. 


14,366 

20,853 

19,349 

1,789 

36,289 
18,095 
28,814 
11,062 


Per  cent. 


Low- 
est. 


ai 

L6 

.8 

3.4 

.3 

.8 

.8 

2.2 


High- 

est. 


9.6 
13.7 
24.5 
17.0 

23.1 
15.6 
12.2 
37.8 


Aver- 
age. 


4.0 
4.3 
5.0 
8.9 

8.2 
4.2 
3.8 
6.5 


The  relatively  small  tonnages  for  the  first  half  of  1916  are  due 
to  the  fact  that  few  contracts  are  made  during  the  first  six  months 
of  the  year. 

The  commissions  of  eastern  jobbers  ranged  from  1.4  per  cent  to 
6  per  cent  during  the  period  covered.  There  was  little  change  in  the 
average  commissions,  the  highest  being  3.7  per  cent  in  1913  and  the 
lowest  being  3  per  cent  in  the  first  half  of  1916.  The  margins  of 
profit  on  purchases  and  sales  showed  a  wider  range  and  a  higher 
average  than  the  commissions.  The  range  was  from  0.1  per  cent  to 
24.5  per  cent,  the  latter  figure,  however,  being  for  1915.  There  was 
a  continuous  advance  in  the  average  margin  of  profit  from  4  per 
cent  in  1913  to  8.9  per  cent  in  the  first  half  of  1916. 

The  commission  business  of  western  jobbers  was  done  at  rates 
ranging  from  1  per  cent  to  4  per  cent.  The  lowest  average  commis- 
sion was  1.3  per  cent  in  1915  and  the  highest  was  3  per  cent  during 
the  first  half  of  1916.  The  margins  on  purchases  and  sales  ranged 
from  0.3  per  cent  to  37.8  per  cent,  though  it  should  be  noted  that  the 
usual  margins  were  a  little  below  12  per  cent.  The  average  margins 
increased  from  3.2  per  cent  in  1913  to  6.5  per  cent  in  the  first  half 
of  1916. 

The  average  commissions  of  the  eastern  jobbers  were  slightly 
higher  than  those  of  the  western  jobbers  except  in  the  first  half  of 
1916,  when  they  were  the  same.  Their  average  margins  of  profit  on 
purchases  and  sales  were  also  higher  in  all  the  periods. 

As  only  a  few  contracts  were  made  on  the  Pacific  coast  during 
the  first  half  of  1916,  no  margins  have  been  included  in  the  table  for 
jobbers  in  that  group. 


jobbers'  commissions  and  margins  of  gross  profit. 


77 


Section  3.  Margins  of  profit  on  open-market  sales. 

In  this  section  are  shown  jobbers'  margins  of  profit  on  open- 
market  transactions  as  distinguished  from  contract  transactions. 
Most  of  this  business  is  handled  on  a  buy-and-sell  basis. 

Margins  on  sheet  news,  1915-19 le. — The  margins  in  percentages 
are  shown  in  the  following  table  by  ranges  for  1  to  17  tons,  inclusive, 
of  sheet  paper,  for  the  year  1915  and  for  the  first  and  second  quarters 
of  1916. 

Table  15.— JOBBERS'  MARGINSJN  PERCENTAGES  OF  PURCHASE  PRICE,  ON  OPEN- 
MARKET  SALES  TO  PUBLISHERS  OF  1  TO  17  TONS,  INCLUSIVE,  OF  NEWS-PRINT 
PAPER  IN  SHEETS,  BY  GROUPS,  1915-1916  (FIRST  HALF). 


Date. 

Eastern. 

Western. 

Pacific  coast. 

Lowest. 

Highest. 

Lowest. 

Highest. 

Lowest. 

Highest 

1915 

2.4 

3.0 
8.3 

27.9 

45.8 
56.6 

2.2 

4.2 
4.3 

32.5 

34.3 
UOLO 

4.0 

4.0 
7.6 

47.  S 

1916: 

First  nnartw ........... 

29.1 

Second  Quarter 

32.5 

>  The  weighted  average  margin  of  the  jobber  haying  this  maximum  margin  was  41.9  per  cent  during  the 
second  quarter  of  1916. 

There  was  an  increase  in  the  minimum  margins  during  the  period 
covered  by  the  table  in  all  the  groups  shown.  These  minimum 
margins  are  more  characteristic  of  the  returns  generally  received  by 
the  jobbers  than  the  maximum  margins.  The  increase  in  the  mini- 
mum margins  for  the  eastern  group  was  from  2.4  per  cent  in  1915 
to  8.3  per  cent  in  the  second  quarter  of  1916.  The  increase  in  the 
Western  group  during  the  same  period  was  from  2.2  per  cent  to 
4.3  per  cent.  In  the  Pacific  coast  group  the  increase  was  from  4 
per  cent  to  7.6  per  cent. 

The  maximum  margins  increased  during  the  same  period  in  the 
Eastern  and  Western  groups — in  the  former  from  27.9  per  cent  to 
55.6  per  cent  and  in  the  latter  from  32.5  per  cent  to  101  per  cent. 
The  weighted  average  margin  of  the  jobber  having  the  maximum 
margin  of  101  per  cent  was  41.9  per  cent  during  the  second  quarter 
of  1916. 

The  maximum  margins  in  the  Pacific  coast  group  were  47.5  per 
cent  in  1915  and  32.5  per  cent  in  the  second  quarter  of  1916. 

Prices  and  margins  in  i917. — In  response  to  a  request  of  the  Com- 
mission a  large  number  of  jobbers  furnished  their  cost  and  selling 
prices  for  news-print  paper  in  rolls  and  in  sheets  during  January 
and  February,  1917.  These  prices  have  been  tabulated  for  all  trans- 
actions where  shipments  were  made  direct  from  the  mill  to  pub- 
lishers and  where  the  purchase  and  sale  were  on  the  same  basis,  i.  e., 
f.  o.  b.  mill  or  f.  o.  b.  destination.     Sales  on  commission,  however, 


*-i~. 


If 


i  ! 


w 


78 


BEPOBT  ON   NEWS-PBINT  PAPER  INDUSTBY. 


are  not  included  in  the  tabulations  given  below.     The  commission 
in  most  cases  was  3  per  cent. 
The  tabulation  for  roll  news  is  as  follows : 

JOBBERS'   PRICES  AND  MARGINS   PER   100  POUNDS   ON  OPEN-MARKET   SALES   OF 
NEWS-PRINT  PAPER  IN  ROLLS,  JANUARY-FEBRUARY,  19:7. 

[Direct  Shipments.] 


Quantity  in  pounds. 


Cttfload: 

36,000 

41,795 

44,449 

54,286 

44,108 

51,080 

40,048 

38,211 

41,904 , 

41,082 

44,623 

47,113 , 

39,649 

47,197 , 

44,595 

40,820 

36,609 

L«ss  than  carload: 

6,800 , 

1,600 

1,000 

7,400 

8,000 

7,600 

10,555 

2,840 

10,200 

10,472 

1,000 


Jobbers' 

cost 

price 

f.  o.  b. 

mill. 


$3.50 
4.00 
4.25 
4.75 
4.25 
4.25 
6.00 
5.39 
6.50 
5.00 
4.25 
5.50 

»5.50 
4.25 
4.50 
6.00 
5.00 

15.00 
>5.09 
»5.09 
16.09 

5.00 
»5.00 
»4.76 

6.00 
15. 60 
16.51 
»5.09 


Jobbers' 
selling 

price 
f.  o.  b. 

mill. 


S6.40 
4.75 
4.96 
5.50 
4.76 
4.71 
5.40 
6.75 
6.80 
5.25 
4.46 
5.75 

»5.76 
4.44 
4.69 
6.15 
5.15 

•6.00 
>6.00 
16.00 
16.00 

5.75 
16.76 
15.40 

6.60 
16.00 
16.00 
15.50 


Margins. 


Amount. 


SI.  90 
.75 
.71 
.75 
.60 
.46 
.40 
.36 
.30 
.25 
.20 
.25 
.25 
.19 
.19 
.16 
.15 

1.00 
.91 
.91 
.91 
.75 
.76 
.64 
.60 
.60 
.49 
.41 


Per  cent 
of  cost 
price. 


64.8 
18.8 
16.6 
15.8 

n.8 

10.8 
8.0 
6.7 
5.6 
5.0 
4.7 
4.6 
4.6 
4.6 
4.2 
8.0 
3.0 

20.0 

17.9 

17.9 

17. » 

15.0 

16.0 

13.4 

10.0 

9.1 

8.9 

8.1 


» P.  0.  b.  destination,  or  jobbers'  shipping  station. 

On  carload  lots  the  highest  margin  was  $1.90  per  100  pounds,  or 
54.3  per  cent  of  the  jobber's  cost  price.  This  unusually  high  margin 
was  due  largely  to  the  low  price — $3.50  per  100  pounds — that  the 
jobber  paid  for  the  paper.  On  the  other  sales  in  carload  lots  the 
margins  ranged  from  15  cents  to  75  cents  per  100  pounds,  or  from 
3  per  cent  to  18.8  per  cent  of  the  jobber's  cost  price.  On  less  than 
carload  sales  the  margins  ranged  from  41  cents  to  $1  per  100  pounds 
or  from  8.1  per  cent  to  20  per  cent  of  the  jobber's  cost  price. 


jobbers'  commissions  AND  MARGINS  OF  G30SS  PROFIT.  79 

The  tabulation  for  sheet  news  is  as  follows : 

JOBBERS'  PRICES  AND  MARGINS  PER  100  POUNDS  ON  OPEN-MARKET  SALES  OF  NEWS- 
PRINT PAPER  IN  SHEETS,  JANUARY-FEBRUARY,  1917. 

pirect  Shipments.] 


Quantity 

in 
pounds. 

Jobbers' 

cost 

price 

To.  b. 

mill. 

Jobbers' 

selling 

price 

Co.  b. 

mill. 

Margins. 

Amount. 

Por  cent 
of  cost 
price. 

6,000 

$4.oe 

$5.00 

si.oe 

25.0 

12,000 

4.00 

5.00 

1.00 

25.0 

2,000 

4.85 

6.00 

1.15 

23.7 

1,000 

4.85 

6.06 

1.15 

23.7 

2,569 

6.75 

7.00 

1.25 

21.7 

2,040 

6.00 

7.25 

1.25 

20.8 

2,410 

6.00 

7.00 

1.00 

16.7 

2,000 

5.55 

6.35 

.80 

14.4 

2,000 

5.80 

6.60 

.80 

13.8 

8,000 

4.75 

5.40 

.65 

13.7 

2,000 

4.75 

5.40 

.65 

13.7 

6,000 

4.75 

5.40 

.65 

13.7 

4,345 

5.50 

6.25 

.75 

13.6 

2,048 

6.00 

6.75 

.75 

12.5 

2,000 

6.05 

6.75 

.70 

11.6 

2,190 

5.75 

6.40 

.65 

11.3 

10,000 

6.00 

6.65 

.65 

10.8 

3,290 

6.50 

7.10 

.60 

9.2 

560 

5.50 

6.00 

.50 

9.1 

4,073 

5.75 

6.25 

.50 

8.7 

4,000 

6.00 

6.50 

.50 

8.3 

2,000 

6.00 

6.50 

.50 

8.3 

8,000 

5.^ 

5.38 

.38 

7.6 

10,000 

6.30 

6.75 

.45 

7.1 

8,000 

5.50 

5.85 

.35 

6.4 

1,972 

6.30 

5.60 

.30 

5.7 

1,575 

5.00 

5.25 

.25 

5.0 

11,160 

6.60 

6.85 

.25 

4.5 

I 


All  the  sales  of  sheet  paper  shown  in  the  above  tabulation  are  on 
less  than  carload  lots.  The  margins  range  from  25  cents  to  $1.25 
per  100  poimds,  or  from  4.6  per  cent  to  25  per  cent  of  the  jobbers' 
cost  price. 

It  will  be  seen  from  the  two  preceding  tabulations  that,  in  general, 
the  high  prices  charged  by  jobbers  were  due  to  the  high  prices  they 
had  to  pay  for  the  paper,  although  in  some  cases  they  made  ex- 
cessive margins  on  paper  that  they  got  at  low  prices. 

Section  4.  Jobbers'  cost  of  doing  business. 

In  response  to  inquiries  as  to  the  jobbers'  cost  of  transacting  busi- 
ness, representatives  of  the  jobbers  stated  with  reference  to  paper 
shipped  directly  from  the  mill  to  the  consumer  that  sales  in  large 
quantities  are  profitable  at  a  margin  of  3  per  cent.    On  direct  ship- 


^» 


80 


REPORT   ON    NEWS-PRINT  PAPER  INDUSTRY. 


JOBBERS     COMMISSIONS  AND  MARGINS  OF  GROSS  PROFIT. 


81 


ments  as  a  whole  a  margin  of  5  per  cent  was  declared  by  a  represen- 
tative of  a  middle  western  jobber  to  be  sufficient  to  yield  a  fair  profit 
to  the  dealer,  while  in  the  case  of  stock  sales  where  the  paper  passes 
through  the  jobbers'  warehouse  a  margin  of  from  15  per  cent  to  20 
per  cent  was  declared  to  be  sufficient.  With  respect  to  all  classes  of 
transactions  in  neWs-print  paper  the  jobbers'  average  cost  of  doing 
business  was  placed  at  from  12  per  cent  to  17  per  cent  of  the  cost 
price. 

The  principal  items  which  enter  into  the  jobbers'  cost  are  si; Id  to 
be  the  cost  of  soliciting  business,  bookkeeping,  bad  debts,  interest 
on  the  investment  in  warehouses,  and  cartage  to  and  from  the  jobbers' 
warehouses.  The  jobbers'  margins  shown  above  obviously  are  not 
directly  affected  by  the  items  of  interest  on  investment  in  warehouses 
nor  by  cartage  charges,  these  margins  being  based  on  transactions  in 
paper  shipped  directly  from  the  mill  to  the  consumer. 

Section  5.  Conclusions. 

A  review  of  the  foregoing  data  as  to  jobbers'  margins  in  con- 
nection with  the  section  on  prices  indicates  that  the  operations  of 
jobbers  in  news-print  paper  were  as  a  whole  more  profitable  in 
1916  than  during  the  period  1913-1915.  That  such  is  the  case  was 
in  fact  admitted  by  jobbers  themselves  at  a  public  hearing  of  the 
Commission  on  conditions  in  the  news-print  industry.  For  sales 
on  commission  the  rate  of  commission  remained  substantially  the 
same,  but  the  return  to  the  jobber  in  1916  exceeded  the  profits  dur- 
ing the  earlier  period  because  of  the  advance  in  the  price  of  paper 
on  which  the  commission  was  based.  Oa  merchandising  or  buy-and- 
sell  transactions  in  1916  the  price  of  paper  and  the  jobbers'  percentage 
of  profit  both  advanced. 

The  return  to  the  jobber  at  the  higher  margins  and  higher  prices 
prevailing  in  1916  has  obviously  involved  the  inclusion  in  the  price 
to  the  publisher  of  a  profit  considerably  in  excess  of  the  amount 
regarded  as  a  fair  return  to  the  jobber.  In  the  case  of  market  trans- 
actions, for  example,  where  prices  to  the  publisher  advanced  from 
around  $2.25  per  100  pounds  in  1915  to  as  high  as  $6  and  over  in 
1916,  a  jobber  with  a  minimum  margin  of  5  per  cent  on  his  cost  price 
of  $2.14  in  1915  would  receive  less  than  11  cents,  whereas  in  1916, 
with  a  minimum  margin  of  6  per  cent  on  his  cost  price  of  $5.66,  he 
would  receive  about  34  cents.  The  difference  between  jobbers'  profits 
in  1915  and  1916  is,  of  course,  much  greater  when  considered  on  the 
basis  of  the  maximum  margins  in  each  period. 

It  is  thus  apparent  that  the  margins  of  jobbers  were  maintained 
or  advanced  as  the  price  of  paper  advanced  in  1916  to  such  an  extent 
as  to  be  a  contributing  cause  to  the  greatly  increased  cost  of  paper 
to  the  consumer.    This  was  particularly  true  in  the  case  of  publishers 


of  papers  of  relatively  small  circulation  who  as  a  class  are  largely 
dependent  on  jobbers  for  their  requirements  and  who  to  a  great  ex- 
tent buy  at  the  market  prices.  By  January,  1917,  however,  the 
greatly  increased  cost  of  paper  to  publishers  buying  from  jobbers 
was  due  mainly  to  the  high  prices  charged  by  the  mills. 

It  is  pertinent  in  this  connection  to  refer  to  the  reasons  advanced 
by  jobbers  in  justification  of  the  wide  margin  of  profit  shown  in 
some  cases.  Customers  with  a  poor  credit  rating  or  known  to  be 
slow  pay,  it  is  stated,  are  usually  quoted  higher  prices  than  are 
quoted  to  those  known  to  be  prompt  in  making  settlement.  In  other 
words,  the  credit  risk  is  in  the  price.  With  the  increase  in  price  the 
risk  becomes  greater  for  the  reason  that  there  are  many  publishers 
who  were  able  to  pay  promptly  for  a  car  of  paper  costing  $800  in 

1915,  but  who  find  it  difficult  to  pay  $2,000  for  a  similar  quantity  in 

1916.  The  present  high  price  of  paper  has  caused  the  jobbers  to 
resort  more  frequently  to  sight  draft  attached  to  bill  of  lading  on 
shipments  to  customers  considered  poor  pay.  Most  jobbers  also 
claimed  that  the  cost  of  replacement  should  govern  the  selling  price 
regardless  of  the  cost.  If  this  theory  is  not  followed,  they  say,  the 
jobber  is  apt  to  find  himself  stocked  with  high-priced  paper  when 
the  market  declines.  This  contingency,  however,  as  a  general  rule, 
would  arise'only  in  the  case  of  sales  from  stock  and  not  in  the  case  of 
shipments  directly  from  the  mill  to  the  consumer,  which  are  the 
bases  of  the  foregoing  tabulations. 

In  addition  to  the  effect  of  the  higher  margins  of  profit  on  prices, 
the  jobbers  handling  news-print  paper  in  1916  were  also  responsible 
in  part  for  the  creation  of  a  panic  among  publishers.  Whether  done 
with  intent  to  profit  thereby  or  not,  the  jobbers  through  their  sales- 
men and  by  correspondence  contributed  to  the  exaggeration  of  the 
belief  of  an  increasing  shortage,  which  tended  to  cause  prices  to  rise.^ 

^  For  copies  of  circulars  sent  out  by  Jobbers  in  regard  t«  high  prices  and  scarcity  ol 
paper,  see  Exhibit  6. 


88569*— 17- 


-6 


\ 


mm, 


r-^. 


COSTS  AND  PROFITS   OF   MANUFACTURE. 


83 


CHAPTER  V. 
COSTS  AND  PROFITS  OF  MANTTFACTTJRE. 

Section  1.  Introduction. 

This  chapter  deals  with  the  costs  and  profits  of  news-print  paper 
manufacturers  and  contains  information  throwing  light  on  the 
reasonableness  of  the  prices  presented  in  Chapter  III.  The  cost 
and  profit  data  were  obtained  direct  from  the  books  of  manufacturers 
except  for  a  few  of  the  smaller  companies,  which  furnished  the  fig- 
ures by  correspondence.  The  costs  and  profits  of  these  smaller 
companies  have  not  been  included  in  the  tables  of  averages  shown 
in  following  sections,  but  are  discussed  separately. 

Considerable  difficulty  was  experienced  in  arriving  at  the  true  cost 
of  manufacture,  because  of  the  great  variation  found  in  the  methods 
of  keeping  costs.  While  some  companies  had  very  excellent  systems, 
others  had  systems  so  incomplete  that  it  was  difficult  to  ascertam 
what  their  costs  really  were.  This  variation  necessitated  consider- 
able readjustment  and  revision  of  the  figures  in  order  to  put  them  on 
a  uniform  basis  and  make  them  in  accord  with  the  best  accountmg 

practice.  . 

Even  greater  difficulty  was  experienced  in  arrivmg  at  the  rate  of 
profit  on  investment  in  the  news-print  industry,  because  the  cost  of 
investment  could  not  have  been  obtained  except  by  an  exhaustive 
investigation  requiring  a  much  longer  period  of  time  than  could  be 
devoted  to  this  matter.  Several  of  the  largest  companies  were  amal- 
gamations of  smaller  ones,  the  original  cost  of  whose  properties  it 
was  impossible  to  ascertain.  In  most  cases  it  was  found  that  the 
book  investment  of  the  news-print  manufacturers  was  larger  than 
information  obtained  from  paper-mill  engineers  showed  to  be  neces- 
sary to  produce  the  particular  tonnage,  which  indicated  either  that 
the  plants  have  been  written  up  or  that  the  original  costs  were  too 

Items  eliminated  from  costs.— In  arriving  at  the  true  cost  of 
manufacture,  all  intercompany  and  departmental  profits  have  been 
eliminated.  These  arise  in  a  number  of  ways.  Some  companies  have 
wood-land  subsidiaries  or  departments  which  transfer  the  pulp  wood 
to  the  manufacturing  company  or  department  at  a  profit.  One  com- 
pany, in  particular,  showed  substantial  profits  on  the  operations  of 

82 


its  wood-land  subsidiaries,  while  its  news-print  manufacturing  busi- 
ness appeared  to  be  run  at  a  loss. 

Some  companies  charge  their  ground  wood  and  sulphite  into  news- 
print paper  at  a  profit  even  when  made  at  the  same  plant,  this  depart- 
mental profit  being  carried  directly  to  profit  and  loss.  Other  com- 
panies charge  these  materials  into  news-print  paper  at  cost  when 
produced  in  the  same  mill,  but  charge  them  in  at  a  profit  when  trans- 
ferred from  one  mill  to  another. 

All  intercompany  rentals  have  been  eliminated  from  costs.  These 
occur  in  a  few  cases  where  a  plant  is  leased  from  a  subsidiary  or  a 
rental  is  paid  to  a  subsidiary  for  the  use  of  water  power.  All  forms 
of  interest  have  been  eliminated  from  costs,  although  but  few  com- 
panies included  this  item.  Examples  of  such  charges  are  bond  in- 
terest, interest  on  borrowed  money,  bank  discounts,  interest  on  ad- 
vances to  subsidiaries,  interest  on  timber-land  investment,  etc. 

Readjustment  of  depreciation. — The  great  variation  in  the  prac- 
tice of  companies  with  respect  to  depreciation  made  it  necessary  for 
the  Commission  to  substitute  computed  depreciation  figures  for  those 
found  in  the  books  of  companies,  in  order  that  the  costs  should  include 
a  fair  charge  for  this  important  item.  Some  companies  did  not 
charge  any  depreciation  at  all.  Others  charged  off  certain  amounts 
each  year  according  to  temporary  financial  exigencies,  carrying  it 
directly  to  profit  and  loss.  A  few  companies  have  had  their  prop- 
erties appraised  by  engineers  and  have  carried  a  depreciation  item 
in  their  costs,  based  on  expert  information.  The  usual  practice  of 
news-print  paper  manufacturers  is  to  charge  all  of  the  depreci- 
ation to  news-print  paper,  or  the  final  product.  Only  two  com- 
panies distributed  the  depreciation  charge  back  to  ground  wood 
and  sulphite.  Although  this  method  is  preferable,  the  Commission 
found  it  impracticable  to  make  an  accurate  distribution,  and  hence 
in  all  cases  has  charged  the  depreciation  entirely  to  news  print. 
One  or  two  companies  have  been  charging  off  depreciation  at  such 
high  rates  that  they  have  been  reducing  their  plant  investment 
more  rapidly  than  is  necessary.  Other  companies  have  charged 
their  depreciation  on  an  inflated  book  investment  or  have  loaded 
present  costs  with  depreciation  which  should  have  been  charged 
in  earlier  years. 

The  Commission's  depreciation  figures  were  based  on  the  testi- 
mony of  expert  mill  engineers,  which  was  to  the  effect  that  3  per 
cent  on  the  investment  in  plant  and  equipment  is  sufficient  to  de- 
preciate the  outlay  in  a  modern  mill.  This  conclusion  was  also 
reached  by  the  Tariff  Board  in  its  report  in  1911.^  Assuming 
that  the  investment  in  depreciable  property  for  a  100-ton  mill  is 

*Pnlp  and  News-Print  Paper  Industry;  S.  Doc.  No.  31,  e2d  Cong.,  1st  sess.,  p.  74. 


84 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS  OP  MANUFACTURE. 


85 


$1,800,000,  the  depreciation  charge  at  3  per  cent  would  amount  to 
about  $1.75  per  ton  of  product.  This  is  based  on  a  full  produc- 
tion for  310  days  in  the  year.  The  depreciation  charges  of  several 
well-managed  companies  were  found  to  approach  quite  closely  to 

this  figure. 

In  the  cost  tables  shown  in  this  report  $1.75  a  ton  has  been 
allowed  on  the  cost  of  news-print  paper  for  depreciation  where 
the  ground  wood  and  sulphite  were  not  purchased.  Where  the 
sulphite  was  purchased,  $1.49  per  ton  was  allowed;  and  where  both 
the  ground  wood  and  sulphite  were  purchased,  $1.05  was  allowed. 
Such  a  scale  of  depreciation  costs,  while  somewhat  arbitrary,  is 
believed  to  be  fair,  and  if  in  error  it  is  probably  too  high. 

In  this  connection  it  should  be  pointed  out  that  the  output  of 
a  plant  is  not  a  satisfactory  basis  for  computing  depreciation  and 
has  only  been  adopted  in  this  case  because  it  was  impossible  to 
arrive  at  a  more  satisfactory  basis. 

Miscellaneous  readjustments. — Variation  in  the  practice  of  com- 
panies with  respect  to  a  number  of  items  of  expense  has  necessitated 
making  some  readjustments.     Some  of  the  more  important  ones  are 

as  follows: 

Bad  debts  have  been  charged  to  selling  expense  and  not  included 

in  factory  costs. 

Taxes,  insurance,  and  administration— three  items  of  general  ex- 
pense included  in  costs— have  been  distributed  to  news-print  paper, 
sulphite,  and  ground  wood  instead  of  being  charged  entirely  to  news- 
print costs.  The  basis  of  distribution,  where  not  made  by  the  com- 
panies, was  50  per  cent  to  paper  and  25  per  cent  each  to  ground  wood 
and  sulphite.  Where  a  company  did  not  have  a  sulphite  plant,  the 
percentages  used  were  70  per  cent  to  paper  and  30  per  cent  to  ground 
wood.  These  percentages  were  found  to  be  in  use  by  various  com- 
panies. 

Profits  obtained  from  the  sale  of  screenings,  which  are  by-products 
in  the  production  of  sulphite  and  ground  wood,  were  deducted  from 
the  cost  of  these  materials,  and  profits  obtained  from  the  sale  of  waste 
materials  such  as  felts,  rubber,  scrap  iron,  etc.,  were  deducted  from 
the  item  of  repair  materials  in  conversion  costs.  In  a  few  cases 
where  the  information  warranted  the  depletion  charges  found  in 
the  wood  costs  of  companies  obtaining  pulp  wood  from  lands  owned 
in  fee  were  reduced.  In  one  case  where  it  appeared  that  the  com- 
pany had  failed  to  make  a  proper  allowance,  a  liberal  depletion 
charge  was  added  to  the  costs. 

The  total  changes  made  in  the  costs,  as  shown  by  the  books  of  the 
companies,  after  debiting  or  crediting  certain  items  found  in  the 
profit  and  loss  accounts  of  companies,  resulted  in  a  deduction  of  only 
$1.48  per  ton  from  the  average  cost  for  United  States  mills  in  1915, 


jind  $1.15  per  ton  for  the  first  half  of  1916.  For  Canadian  mills  the 
revisions  resulted  in  small  additions  to  the  cost  as  shown  by  the 
books. 

Section  2.  News-print  paper  costs,  1913-1916. 

In  order  to  ascertain  what  changes  have  occurred  in  the  various 
items  entering  into  the  cost  of  making  news-print  paper  since  1913, 
averages  have  been  compiled  for  the  principal  mills  in  the  United 
States  and  Canada  for  the  years  1913,  1914,  1915,  and  the  first  six 
months  of  1916.  The  figures  included  in  these  averages  were  ob- 
tained from  mills  representing  more  than  80  per  cent  of  the  total 
production  in  the  United  States  for  all  years  except  1913  and  90  per 
cent  or  more  of  the  production  for  Canadian  mills  except  for  the 
first  half  of  1916,  when  the  percentage  was  about  75. 

The  various  items  of  cost  are  divided  into  three  principal  groups, 
(1)  stock,  which  includes  sulphite,  ground  wood,  and  other  mate- 
rials used;  (2)  conversion,  which  includes  labor,  power,  fuel,  and 
various  supplies  necessary  to  convert  the  raw  materials  into  paper; 
and  (3)  general  expenses,  which  include  taxes,  insurance,  adminis- 
tration, etc.  Depreciation,  which  is  also  a  general  expense,  is  shown 
separately.  Selling  expenses  are  shown  in  a  later  section  dealing 
with  profits. 

Table  16  shows  the  average  cost  per  ton,  by  years,  of  making  news- 
print paper  for  United  States  mills,  Canadian  mills,  and  United 
States  and  Canadian  mills  combined  for  the  period  1913  to  June  30, 
191*6,  inclusive. 


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88 


REPORT  ON    NEWS-PRINT  PAPER   INDUSTRY. 


COSTS  AND  PROFITS   OF   MANUFACTURE. 


89 


The  table  shows  that  the  total  cost  of  making  news-print  paper, 
including  depreciation,  was  somewhat  lower  at  the  end  of  the  three 
and  one-half  year  period  than  at  the  beginning.  The  average  cost 
for  the  United  States  mills  covered  by  the  table  was  $33.42  in  1913  as 
compared  with  $31.93  in  the  first  half  of  1916.  Likewise,  the  average 
cost  for  the  groups  of  Canadian  mills  shown  in  the  table  was  $30.32 
in  1913  as  compared  with  $27.43  in  the  first  half  of  1916,  a  decline  of 
$2.89  per  ton.  The  average  cost  for  United  States  and  Canadian 
mills  combined  was  $32.82  in  1913  and  $30.99  in  1915  as  compared 
with  $30.63  in  the  first  half  of  1916. 

The  average  cost  for  United  States  mills  in  the  first  half  of  1916 
exceeded  that  of  Canadian  mills  by  $4.50  per  ton,  $4.44  of  which  is 
due  to  the  difference  in  the  cost  of  sulphite  and  ground-wood  pulp 

and  conversion  labor. 

It  should  be  noted  in  discussing  these  costs  that  the  number  of 
mills  included  in  the  average  for  each  year  is  not  exactly  the  same. 
This  does  not  materially  affect  the  results,  however,  because  of  the 
large  tonnage  included.  If,  for  instance,  the  figures  for  1915  and  the 
first  half  of  1916  were  made  strictly  wmparable  in  this  respect,  the 
difference  between  them  would  be  reduced  somewhat  but  the  cost  for 
the  1916  period  both  for  United  States  and  Canadian  mills  would 
still  be  a  few  cents  lower. 

The  average  cost  per  ton  for  stock  used  by  United  States  mills  de- 
clined in  the  same  manner  as  the  total  cost  of  making  paper,  but  the 
conversion  cost  decreased  between  1913  and  1915  and  then  increased 
in  the  first  half  of  1916  about  40  cents  per  ton.  This  increase  was  due 
mainly  to  an  increase  in  the  cost  of  fuel.  General  expenses  increased 
in  1914,  decreased  in  1915,  and  increased  again  in  the  first  half  of 

1916.  , 

The  average  cost  for  stock  used  by  the  Canadian  mills  shown  m  the 
table  was  about  21  cents  per  ton  higher  in  1914  than  in  1913  but  de- 
clined in  1915  and  the  first  half  of  1916.  The  total  conversion  cost 
declined  steadily  from  1913  to  the  first  half  of  1916  being  $1.30  per 
ton  lower  in  the  latter  period.  The  total  general  expense  showed  the 
same  downward  trend. 

Turning  to  particular  items  it  is  seen  that  the  average  cost  of 
sulphite  per  ton  of  paper,  on  the  whole,  showed  a  slight  decline  in 
both  the  United  States  and  Canada.  The  cost  of  ground  wood  per 
ton  of  paper  also  showed  a  small  decline,  except  for  Canadian  mills, 
in  1914,  where  the  inclusion  of  two  new  mills  in  the  averages  raised 
this  cost  to  about  50  cents  per  ton.  As  sulphite  and  ground  wood 
constitute  about  60  per  cent  of  the  total  cost  of  paper,  the  decline 
in  the  cost  of  these  items  was  the  most  important  factor  causing  the 
decline  in  the  total  cost  of  manufacture  between  1913  and  the  first 


half  of  1916.  The  items  that  showed  the  most  noticeable  increase 
in  cost  in  the  first  half  of  1916  were  fuel,  felts,  wires,  and  repair  ma- 
terials. Higher  prices,  apparently,  were  paid  for  these  materials  on 
all  new  contracts.  Of  these  various  items  the  cost  of  fuel  is  the  most 
important,  since  it  represents  about  6  or  7  per  cent  of  the  total  cost 
of  making  paper. 

While  there  was  a  general  increase  in  the  rate  of  wages  in  a  num- 
ber of  mills  during  the  spring  of  1916,  the  cost  of  conversion  labor 
per  ton  of  paper  did  not  increase,  probably  on  account  of  the  fact 
that  increased  production  reduced  the  unit  cost  of  this  item.  For 
example,  the  labor  cost  per  ton  of  one  large  company  declined 
steadily,  although  two  increases  in  their  scale  of  wages  were  made 
during  the  period  covered.  The  output  of  this  company,  however, 
increased  more  than  45  per  cent  in  three  and  one-half  years. 

Average  costs  for  second  half  of  i916. — In  December,  1916,  the 
Commission  secured  cost  data  from  23  mills  in  the  United  States  for 
a  part  of  the  second  half  of  1916.  The  period  covered  for  most  of 
these  mills  was  four  months ;  for  a  few  it  was  three  months,  and  for  a 
few  others  it  was  five  months.  These  mills  during  the  first  half  of 
1916  produced  about  60  per  cent  of  the  total  production  of  the  United 
States  and  about  75  per  cent  of  the  tonnage  included  in  the  tables  of 
the  Commission  for  previous  periods.  No  adjustments  were  made  in 
these  data,  and  the  average  results  are  compared  with  the  unrevised 
costs  as  shown  by  the  companies  for  the  first  half  of  1916.  Though 
seven  mills  showed  a  decline  in  costs  for  the  latter  period,  the  average 
cost  for  all  mills  was  $1.50  per  ton  higher  than  the  average  cost  for 
the  same  mills  in  the  first  half  of  1916.  This  was  due  chiefly  to  the 
increase  in  the  cost  of  ground  wood,  labor,  and  wires. 

Although  the  cost  of  producing  sulphite  increased  during  this 
latter  period,  as  shown  in  section  3  of  this  chapter,  the  cost  of  sulphite 
per  ton  of  paper  produced  was  less.  Apparently  this  was  due  to  the 
fact  that  the  mills  were  using  a  smaller  proportion  of  sulphite  in  the 
manufacture  of  news  print. 

In  February,  1917,  the  Commission  made  a  further  examination  of 
costs,  obtaining  data  from  27  mills  in  the  United  States  for  either 
the  month  of  December,  1916,  or  January,  1917.  These  mills  rep- 
resent about  65  per  cent  of  the  total  production  in  1916.  The  results 
for  this  one-month  period  show  that  the  costs  for  the  various  mills 
had  increased  from  $1  to  $19.23  per  ton,  the  average  cost  for  all 
mills  being  $5.52  per  ton  higher  than  the  average  cost  for  the  same 
mills  in  the  first  half  of  1916. 


90 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS  OP  MANUFACTURE. 


91 


Percentage  of  cost. — The  percentage  of  the  total  cost  of  manufac- 
ture of  news-print  paper  attributable  to  each  of  the  various  items  of 
cost  for  United  States  and  Canadian  mills  combined  during  the 
period  1913  to  1916,  first  half,  are  shown  by  Table  17  following : 

Table  17.— PERCENTAGE  OF  TOTAL  COST  OF  PRODUCING  NEWS-PRINT  PAPER  AT- 
TRIBUTABLE TO  PARTICULAR  ITEMS— UNITED  STATES  AND  CANADIAN  IflLLS 
COMBINED— 1913-1916  (FIRST  HALF). 


Item. 

1913 

1914 

1915 

First  half 
1916. 

Stock: 

Sulphite '. 

Percent. 

24.41 

34.71 

LIS 

.62 

.35 

L72 

Per  cent. 

23.69" 

34.97 

L14 

.54 

.36 

LI5 

PereenL 

23.66 

34.67 

L20 

.63 

.28 

2.26 

Percent. 
23.36 

Ground  wood 

34.30 

Fillers 

.80 

A  him  .......n...... .,.,T 

.63 

Sizing 

.21 

Miscellaneous 

L96 

Totla 

62.89 

62.49 

62.70 

6L2i 

Conversion: 

Labor 

10.20 

2.57 

L16 

.28 

.26 

3.97 

6.39 

.76 

3.37 

10.17 

2.48 

LOS 

.33 

.26 

3.91 

6.36 

.90 

8.55 

10.16 
2.35 
L24 
.30 
.25 
3.29 
6.35 
L14 
3.56 

9.99 

Felts 

2.51 

Wins 

L36 

Belting 

.30 

Lubricants 

.22 

I?flr*lr8                  .  .  .           ,.T, 

3.54 

Fuel 

7.28 

Power  and  water  rentals. 

LOS 

MisceUAneoiLs ,  - .  - ,  r ,  - , 

3.60 

Total 

28.96 

29.04 

28.64 

29.88 

G«neral  expense: 

Taxes  and  insurance 

L19 

L82 

L36 

L92 

LIS 
2.00 

L33 

General  and  Administrative ,ttt-t t r 

L96 

Total 

3.01 

3.28 

3.18 

3.29 

Denradation.  

5.14 

5.19 

5.48 

5.57 

Total  cest 

100.00 

100.00 

100.00 

100.00 

The  table  shows  that  during  the  three  and  one-half  year  period  the 
cost  of  sulphite  per  ton  of  paper  represented  from  23.4  to  24.4  per 
cent  of  the  total  cost  of  manufacture  and  the  cost  of  ground  wood 
per  ton  of  paper  from  34.3  to  35  per  cent  of  the  total  cost.  The  two 
items  together  represented  from  57.7  to  59.1  per  cent  of  the  total  cost 
of  manufacture,  while  all  other  items  of  stock  together  represented 
only  from  3  to  4  per  cent.  Of  the  total  cost  of  ground  wood  and 
sulphite  about  68  per  cent  is  represented  in  the  cost  of  pulp  wood 
used,  which  it«»m  represents  about  40  per  cent  of  the  total  cost  of 
making  paper. 


Total  conversion  costs  per  ton  of  news-print  paper,  of  which  about 
a  third  was  labor,  represented  from  28.6  to  29.9  per  cent  of  the  total 
cost  of  manufacture.  The  other  important  conversion  items  were  as 
follows :  Fuel,  6.4  to  7.3  per  cent ;  felts,  wires,  belting,  and  lubricants 
together,  4.1  to  4.4  per  cent;  repairs  (including  repair  material  and 
repair  labor),  3.3  to  4  per  cent;  power,  from  0.8  to  1.1  per  cent; 
miscellaneous  expenses  (includes  finishing,  mill  office,  and  other  mis- 
cellaneous operating  expenses),  3.4  to  3.6  per  cent. 

The  total  general  expenses,  excluding  depreciation,  per  ton  of  news- 
print paper  represented  from  3  to  3.3  per  cent  of  the  total  cost  of 
manufacture,  of  which  about  one-third  was  attributable  to  taxes 
and  insurance  and  two-thirds  to  other  general  and  administrative 
expenses. 

The  item  of  depreciation,  as  computed  by  the  Commission,  repre- 
sented from  5.1  to  5.6  per  cent  of  the  total  cost  of  making  news-print 
paper. 

Cost  or  news-print  paper,  by  groups  of  mills. — The  differences 
in  the  cost  of  production  of  the  domestic  news-print  mills  included 
in  the  table  of  average  costs  is  shown  by  Table  18  below,  which  groups 
these  mills  into  six  classes  and  shows  the  number  included,  tonnage 
represented,  percentage  of  the  total  tonnage,  and  the  average  cost 
for  each  group  for  the  years  1913,  1914,  1915,  and  the  first  half 
of  1916. 

Table  18.— COST  OF  PRODUCTION  OF  NEWS-PRINT  PAPER  IN  UNITED  STATES  MILLS 
COVERED  BY  THE  INVESTIGATION,  ARRANGED  BY  GROUPS  ACCORDING  TO  COST 
PER  TON,  1913-1916  (FIRST  HALF). 


1913. 


1  (less  than  $27) 

n  (S27  and  less  than  $30). 
m  ($30  and  less  than  $33). 
IV  ($33  and  less  than  $36) . 

V  ($36  and  less  than  $40). 
VI  ($40  and  over) 


Total. 


1914. 


I  (less  than  $27) 

II  ($27  and  less  than  $30). 
m  ($30  and  less  than  $33). 
rv  ($33  and  less  than  $36). 

V  ($36  and  less  than  $40) . 
VI  ($40  and  over) 


Total. 


Number 
of  mills. 

Produced, 

Per  cent 
of  total. 

A  verage 

cost  per 

ton. 

Ttu. 

2 

169,548 

l$.t 

$26.51 

3 

82,773 

8.7 

27.67 

1 

76,290 

8.0 

30.97 

8 

214,678 

22.7 

34.66 

14 

361,602 

38.3 

36.93 

2 

40,472 

4.3 

4A.80 

30 

944,363 

loe.o 

33.42 

3 

192,705 

18.5 

26.27 

1 

59,681 

6.7 

27.17 

4 

210,113 

20.1 

3L66 

12 

229,201 

22.0 

34.97 

13 

338,522 

32.4 

37.32 

2 

13,308 

L3 

40.43 

35 

1,043,530 

100.0 

33.06 

'■"|V; 


92 


REPORT  ON    NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS  OF  MANUFACTURE. 


93 


Table  18.— COST  OF  PRODUCTION  OF  NEWS-PRINT  PAPER  IN  UNITED  STATES  MILLS 
COVERED  BY  THE  INVESTIGATION,  ARRANGED  BY  GROUPS  ACCORDING  TO  COST 
PER  TON,  19ia-1916( FIRST  HALF)— Continued. 


Group. 


1915. 

I  (less  than  127) 

II  ($27  and  less  than  $30) 

III  ($30  and  less  than  $33) 

IV  ($33  and  less  than  $36) 

V  ($36  and  less  than  $40) 

VI  ($40  and  over) 

Total 

1916  (first  half). 

I  (less  than  $27) 

n  ($27  and  less  than  $30) 

m  ($30  and  less  than  $33) 

IV  ($33  and  less  than  $36) 

V  ($36  and  less  than  $40) 

VI  ($40  and  over) 

Total 


Number 
of  mills. 


S 

2 

8 

11 

8 

3 


35 


2 
4 

10 
8 
6 
4 


34 


Produced. 


Tons. 
195,830 
138,934 
260,505 
276,672 
120,199 
33,321 


1,025,461 


47,436 

146,850 

150,233 

117,729 

34,441 

43,147 


539,836 


Per  cent 
of  total. 


19.1 
13.5 
26.4 
27.0 
11.7 
3.3 


100.0 


8.8 

27.2 

27.8 

21.8 

6.4 

8.0 


100.0 


Average 

cost  per 

ton. 


t26.64 
28.51 
31.64 
34.75 
37.74 
43.67 


32.21 


25.56 
28.10 
31.30 
34.96 
37.08 
41.76 


31.93 


In  1913,  while  the  average  cost  of  all  the  30  mills  was  $33.42  per 
ton,  the  cost  of  the  groups  ranged  from  $26.51  for  the  two  lowest  mills 
combined  to  $40.80  for  the  two  highest  mills  combined.  The  range 
for  individual  mills  was  from  $26.38  to  $40.90  per  ton.  About  27 
per  cent  of  the  total  tonnage  was  produced  for  less  than  $30  per  ton, 
and  57.4  per  cent  was  produced  for  less  than  $36  per  ton. 

The  range  of  costs  for  the  35  mills  by  groups  in  1914  was  from 
$26.27  for  the  three  lowest  mills  combined  to  $40.43  for  the  two  high- 
est mills  combined,  while  the  average  cost  for  35  mills  was  $33.08. 
The  lowest  individual  mill  cost  was  $26.14  per  ton,  and  the  highest 
$40.47.  In  this  year  only  24.2  per  cent  of  the  total  tonnage  was  pro- 
duced for  less  than  $30  per  ton,  and  66.3  per  cent  was  produced  for  less 
than  $36  per  ton. 

In  1915  the  costs  for  35  mills  by  groups  ranged  from  $26.64  per  ton 
for  the  three  lowest  mills  combined  to  $43.67  for  the  three  highest 
mills  combined,  while  the  average  cost  for  35  mills  was  $32.21.  The 
lowest  cost  for  a  single  mill  was  $25.77  per  ton,  and  the  highest  $44.41 
per  ton.  In  this  year  about  33  per  cent  of  the  total  tonnage  was  pro- 
duced for  less  than  $30  per  ton,  and  85  per  cent  for  less  than  $36 
per  ton. 

In  the  first  half  of  1916  the  range  of  costs  for  34  mills  by  groups 
was  from  $25.56  per  ton  for  the  two  lowest  mills  combined  to  $41.76 
per  ion  for  the  four  highest  mills  combined,  the  average  cost  for  34 


mills  being  $31.93  per  ton.  The  lowest  cost  in  this  period  was  $24.93 
per  ton  and  the  highest  cost  $46.94  per  ton.  In  this  period  36  per  cent 
of  the  total  tonnage  was  produced  for  less  than  $30  per  ton,  and  85.6 
per  cent  for  less  than  $36  per  ton.  Sixteen  mills  had  an  average  cost 
of  less  than  $33  per  ton  as  compared  with  only  13  mills  in  1915. 

It  should  be  noted  that  the  proportion  of  news-print  paper  pro- 
duced by  mills  having  a  cost  of  $40  or  over  increased  during  the  three 
and  one-half  years  from  4.3  per  cent  to  8  per  cent  of  the  tonnage  cov- 
ered by  the  table.  Also  the  range  in  costs  of  individual  mills  was 
greater  for  the  first  half  of  1916  than  for  1915,  the  high  cost  in  the 
1916  period,  $46.94  per  ton,  being  considerably  higher.    (See  p.  95.) 

In  1913,  of  the  7  Canadian  mills  whose  costs  were  obtained,  3 
would  fall  in  Group  II,  3  in  Group  III,  and  1,  with  a  cost  of  $37.17, 
in  Group  V.  In  1914,  4  Canadian  mills  would  fall  in  Group  II 
and  5  in  Group  III,  there  being  none  that  would  fall  in  either  of 
the  remaining  groups.  In  1915,  3  of  the  11  Canadian  mills  would 
fall  in  Group  I,  the  lowest  cost  being  $25.71  per  ton,  5  would  fall  in 
Group  II,  and  3  in  Group  III.  In  the  first  half  of  1916,  4  of  the 
10  Canadian  mills  would  fall  in  Group  I,  with  a  cost  less  than  $27 
per  ton,  4  would  fall  in  Group  II,  and  2  in  Group  III.  The  lowest 
cost  for  any  Canadian  mill  in  this  year  was  $25.68  per  ton. 

Incomplete  cost  data  were  secured,  largely  by  correspondence,  from 
15  additional  mills  in  the  United  States,  which  data  have  not  been 
included  in  the  tables  above.  These  mills  produced  in  1915  and  the 
first  half  of  1916  about  13  per  cent  of  the  total  production.  The 
average  cost  for  these  mills  as  reported  to  the  Commission,  and  with- 
out any  revision,  was  $37.97  per  ton  in  1915  and  $37.81  for  the  first 
half  of  1916.  Had  these  additional  mills  been  included  in  Table  16 
above,  more  than  95  per  cent  of  the  domestic  production  would  have 
been  accounted  for  in  1915  and  about  93  per  cent  in  the  first  half  of 
1916.  The  average  cost  for  the  United  States  with  these  additional 
mills  included  would  have  been  $32.96  per  ton  in  1915  and  $32.73  per 
ton  in  the  first  half  of  1916. 

If  the  15  additional  mills  had  been  included  in  Table  18,  1  would 
fall  in  Group  III,  4  in  Group  IV,  5  in  Group  V,  and  5  in  Group 
VI  in  1915,  and  in  the  first  half  of  1916,  1  would  fall  in  Group  III, 
4  in  Group  IV,  4  in  Group  V,  and  5  in  Group  VI,  while  1  mill  did 
not  manufacture  news  print  in  this  year. 

Cost  of  news-print  paper  by  individual  mills. — The  differences 
in  the  principal  items  of  cost  of  production  of  news-print  paper  for 
the  domestic  mills  are  shown  in  Table  19  below,  which  gives  sepa- 
rately for  each  mill,  whose  cost  *was  secured  from  its  books,  the  cost 
of  sulphite,  ground  wood,  miscellaneous  stock  materials,  conversion, 
general  expenses,  and  depreciation  per  ton  of  news-print  paper  pro- 


11 


m 


II 


■  ■  ■  vs'!^'V  'v?ixiiitfsesw:ii^f'  ■ 


94 


BEPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS  OF   MANUFACTURE. 


95 


k 


1. 


duced  for  the  year  1915  and  the  first  half  of  1916.  The  mills  are 
arranged  in  order  of  the  lowest  costs.  Hence  a  particular  mill  may 
not  have  the  same  number  in  1915  as  in  1916. 

Table  U.— COST  OF  MANUFACTURE    PER  TON  OF  NEWS-PRINT  PAPER  FOR    PRINCI- 
PAL UNITED  STATES  MILLS.  1915-1916  (FIRST  HALF). 


Stock. 

Total 
conver- 
sion. 

General 
exjienses. 

Deprecia- 
tion. 

Mill  No. 

Sulphite. 

Grotmd 
wood. 

Miscella- 
neous. 

Total. 

Tota 
cost. 

1915: 

1 

17.23 
6.52 
8.18 
6.90 
6.36 

7.48 
7.20 
5.39 
6.69 
9.22 

7.02 
6.82 
7.08 
4.91 
5.94 

7.83 
6.10 
8.55 
8.16 
e.96 

8.40 
6.93 
6.72 
6.80 
10.64 

6.61 
9.13 
8.59 
9.44 
8.52 

7.79 

12.44 

4.55 

8.44 

10.69 

S9.00 
8.96 
8.73 
8.59 

ia85 

10.26 

n.i7 

12.78 
12.46 
12.35 

10.70 

n.45 

12.33 
11.56 
11.43 

14.37 
14.03 
12.70 
12.68 
13.07 

10.53 
16.03 
15.41 
13.18 
11.78 

14.87 
14.09 
14.03 
U.70 
13.79 

12.75 
12.78 
16.63 
14.43 
13.73 

SI.  62 
.61 

L65 
.68 

L80 

L25 
1.42 
1.52 
1.43 
1.59 

.31 

1.61 

.74 

L40 
L59 

2.08 
L65 
.77 
2.28 
2.04 

.82 
2.01 
1.58 
1.80 
2.69 

1.79 
3.07 

.83 
1.57 

.90 

L68 
1.63 
2.43 
2.19 
.90 

$17.85 
16.09 
18.56 
16.17 
19.01 

18.99 
19.79 
19.69 
20.58 
23.16 

18.03 
19.88 
20.15 
17.87 
18.96 

23.48 
21.78 
22.02 
23.12 
21.17 

19.75 
24.97 
23.71 
21.78 
24.51 

23.18 
26.29 
23.45 
22.71 
23.21 

22.12 
26.85 
23.61 
25.06 
25.32 

S5.06 
8.46 
6.55 
9.21 

7.78 

7.77 
8.42 
8.43 
7.41 
6.27 

10.95 
9.95 
10.24 
12.25 
11.51 

8.16 

10.12 

8.99 

8.93 

11.15 

11.77 
8.01 
8.85 

11.34 

8.77 

10.73 
8.22 
10.81 
11.05 
16.64 

n.38 

8.85 
13.35 
14.37 
16.18 

SLll 

.38 

1.08 

.39 

.77 

1.97 
.90 
L20 
1.55 
1.17 

1.38 

.64 

.51 

1.34 

L23 

.60 

.87 

1.82 

1.41 

1.09 

1.90 
.69 

1.04 
.99 

L37 

1.12 

1.34 
L97 
1.64 

2.72 
1.80 
1.84 
L57 
M6 

$1.75 
1.75 
L75 
L76 
1.74 

1.72 
1.48 
1.49 
L48 
L45 

1.76 

1.75 
1.75 
1.75 
1.75 

1.66 
L71 
1.75 
L64 
L74 

L75 
1.53 
1.69 
1.74 
L41 

1.76 
1.49 
L40 
1.37 
1.76 

1.46 
L64 
L75 
1.75 
1.75 

$25.77 
26.68 
26.94 

2 

3 

4 

27  52 

6 

29.30 

6 

30.45 

7 

30  50 

8 

30.81 
31  02 

9 

10 

32  05 

11 

32  11 

12 

32.22 

13 

32.65 

14 

33  21 

15 

33  46 

16 

33  90 

17 

34  48 

18 

34  58 

19 

35.10 

20 

35.15 

21 

35  17 

22. 

35.20 

23 

86.29 

24 

36.85 

25 

86.06 

26 

36.78 

27 

36.99 

28 

87.00 

29 

37.10 

30 

37.24 

31 

87.68 

32 

39.14 

33 

40.65 

34 

42.75 

86 

44.41 

Average 

7.47 

11.63 

1.39 

20.49 

9.00 

L03 

1.69 

32.21 

Table  19.— COST  OF  MANUFACTURE   PER  TON  OF  NEWS-PRINT  PAPER  FOR    PRINCI- 
PAL UNITED  STATES  MILLS,  1915-1916  (FIRST  HALF)— Continued. 


MUl  No. 


1916  (first  half): 
1 

2.: 

3 

4 

5 


6. 
7. 
8. 
9. 
10. 

11. 
12. 
13. 
14. 
16. 

16. 
17. 
18. 
19. 
20. 

21- 
22. 
23. 
24. 
25. 

26. 
27. 
28. 
29. 
30. 

31. 
32. 
33. 
34. 


Average . 


Stock. 


Sulphite. 


$7.70 
7.41 
6.70 
7.51 
6.13 

6.48 
4.32 
7.12 
6.82 
6.95 

6.87 
8.12 
7.01 
4.80 
6.71 

6.61 
7.72 
6.96 
6.02 
9.49 

8.02 
7.97 
6.65 
7.93 
8.34 

8.61 
8.35 
9.52 
7.67 
7.39 

7.04 
13.07 

8.75 
11.32 


Ground 
wood. 


7.33 


$8.18 
8.71 
9.08 
8.39 

n.35 

10.67 
13.87 

8.80 
13.44 

9.81 

11.79 
11.00 
11.30 
12.21 
10.43 

11.71 
13.06 
14.02 
13.74 
1L93 

14.16 
10.92 
16.55 
13.01 
12.73 

11.69 
13.37 
12.89 
12.76 
14.66 

13.68 
11.89 
16.22 
16.69 


Miscella- 
neous. 


n.33 


$1.21 

1.27 

.04 

.91 

1.51 

1.07 

.74 

.22 

L65 

L71 

.90 

.40 

.40 

1.10 

1.15 

1.65 
L06 
1.42 
1.08 
2.51 

Ml 
.73 

1.13 
.61 

1.33 

2.30 

.76 
3.62 
1.86 
L38 

3.10 
2.55 
1.22 

L68 


1.09 


Total. 


$17.09 
17.39 
15.82 
16.81 
18.99 

18.22 
18.93 
16.14 
20.91 
18.47 

18.56 
19.52 
18.71 
18.11 
18.29 

19.97 
21.84 
22.40 
20.84 
23.93 

23.29 
19.62 
24.33 
21.46 
22.40 

22.60 
22.48 
26.03 
22.28 
23.43 

23.82 
27.51 
25.19 
29.59 


Total 
conver- 
sion. 


19.75 


$5.36 
5.96 
9.31 
9.13 
6.30 

8.17 
7.93 
10.73 
7.43 
9.09 

10.39 
8.39 
11.28 
11.63 
11.65 

9.69 

8.93 

8.63 

11.14 

8.98 

9.61 
12.66 

9.04 
10.75 
11.38 

10.68 
11.53 
8.17 
12.84 
12.22 

12.73 

9.68 

15.76 

14.46 


General 
expenses. 


9.40 


$.73 
.71 
.50 
.52 

L90 

.82 
2.03 
1.75 
1.27 
2.02 

.71 

1.78 

.74 

1.12 

1.15 

L58 
.79 
.68 
.92 

1.28 

1.08 
1.73 

.85 
1.84 

.96 

1.99 
L29 
L41 
1.06 
1.15 

2.00 
1.75 
1.32 
M4 


Deprecia- 
tion. 


1.08 


$1.75 
1.75 
1.75 
1.75 
1.49 

1.74 
1.45 
1.75 
1.48 
L75 

L75 
L75 
1.75 
1.75 
1.75 

1.75 
L46 
1.70 
L75 
1.34 

1.75 
L75 
1.56 
1.75 
1.75 

1.39 
1.38 
1.49 
1.75 
L75 

1.48 
1.69 
L75 
1.75 


1.70 


Tota 
cost. 


$34.93 
25.81 
27.38 
28.21 
28.68 

28.95 
30.34 
30.37 
31.09 
31.33 

3L41 
31.44 
32.48 
32.61 
32.84 

32.99 
33.02 
33.41 
34.65 
35.53 

35.73 
35.76 
35.78 
35.79 
36.43 

36.66 
36.68 
37.10 
37.93 
38.56 

40.03 
40.63 
44.02 
46.94 


3L93 


The  table  brings  out  the  remarkably  wide  range  of  mill  costs  for 
all  items  except  depreciation  which  was  computed  by  the  Commis- 
sion, as  stated  above.     (See  p.  83.) 

In  1915  the  cost  of  sulphite  ranged  from  $4.55  per  ton  in  mill  No. 
33  to  $12.44  in  mill  No.  32,  while  in  the  first  half  of  1916  the  range 
was  from  $4.32  in  mill  No.  7  to  $13.07  per  ton  of  paper  produced  in 
mill  No.  32.  The  cost  of  ground  wood  in  1915  ranged  from  $8.59  for 
mill  No.  4  to  $16.63  per  ton  of  paper  for  mill  No.  33,  while  in  the  first 
half  of  1916  the  range  was  from  $8.18  for  mill  No.  1  to  $16.59  for 


■■;j*5*;S!#«»* 


'■'■l«Sa<>-^g„:Jg.j-B  . 


96 


REPORT   ON    NEWS-PRINT  PAPER   INDUSTRY. 


mill  No.  34.  The  cost  of  miscellaneous  stock  materials  also  diflfered 
widely  in  the  various  mills  due,  no  doubt,  to  some  extent  to  the  dif- 
ference in  the  quantities  of  clay,  alum,  sizing,  etc.,  used.  The  total 
stock  cost  in  1915  ranged  from  $16.09  per  ton  in  mill  No.  2  to  $26.85 
in  mill  No.  32,  and  in  the  first  half  of  1916  from  $15.82  per  ton  in 
mill  No.  3  to  $29.59  in  mill  No.  34.  Mills  having  the  lowest  total  cost 
generally  have  the  lowest  stock  cost,  since  the  cost  of  stock  materials 
constitutes  such  a  large  proportion  of  the  total  cost  of  manufacture. 
Of  the  19  mills  in  the  first  half  of  1916  whose  total  costs  were  less 
than  $35  per  ton,  in  only  4  mills  did  the  stock  cost  exceed  $20  per 
ton,  and  of  the  15  mills  whose  total  cost  exceeded  $35  per  ton,  in  only 
1  was  the  stock  cost  less  than  $20  per  ton. 

The  conversion  costs  in  the  various  mills  show  as  wide  a  range  as 
stock  costs.  In  1915  the  range  was  from  $5.06  per  ton  for  mill  No.  1 
to  $16.18  for  mill  No.  35,  while  in  the  first  half  of  1916  the  range  was 
from  $5.36  per  ton  for  mill  No.  1  to  $15.76  for  mill  No.  33.  In  the 
first  half  of  1916  of  the  16  mills,  whose  conversion  costs  exceeded  $10 
per  ton,  the  total  cost  was  less  than  $35  per  ton  in  only  6  mills.  Con- 
version costs  are  aflFected  bv  various  factors,  such  as  location  of  mills 
with  respect  to  fuel  and  power,  efficiency  of  equipment,  difference  in 
wages  paid,  etc. 

General  expenses  ranged  in  1915  from  $0.38  per  ton  for  mill  No.  2 
to  $2.72  per  ton  for  mill  No.  31,  and  in  the  first  half  of  1916  from 
$0.50  per  ton  for  mill  No.  3  to  $2.03  per  ton  for  mill  No.  7.  In  the 
first  half  of  1916  of  the  20  mills,  whose  average  cost  for  general  ex- 
penses exceeded  $1.10  per  ton,  the  total  cost  was  less  than  $35  per 
ton  in  9  mills.  General  expenses  are  affected  mainly  by  differences 
in  officers'  salaries  and  other  administrative  expenses. 

Depreciation  ranged  from  less  than  $1.35  per  ton  of  product  in 
mills  which  produce  no  sulphite  and  only  a  portion  of  the  ground 
wood  used  to  $1.75  per  ton  in  mills  which  produce  all  of  both  mate- 
rials used. 

Section  3.  Sulphite  costs,  1913-1916. 

The  changes  that  have  taken  place  in  the  cost  of  producing  sul- 
phite in  United  States  and  Canadian  mills  during  the  years  1913, 
1914,  1915,  and  the  first  half  of  1916  are  shown  in  Table  20  below. 
These  averages  include  all  of  the  mills  having  sulphite  plants  from 
which  news-print  costs  were  obtained  and  show  the  details  of  the 
item  "  sulphite  "  in  the  news-print  costs  shown  in  Table  16.  Nine 
of  the  news-print  mills  in  the  United  States  did  not  have  sulphite 
plants,  but  they  produced  only  about  10  per  cent  of  the  total  ton- 
nage of  news  print  manufactured.  All  of  the  Canadian  mills  in- 
cluded in  the  table  of  news-print  costs  had  their  own  sulphite  plants. 

No  depreciation  is  shown,  the  charge  being  included  in  the  news- 
print paper  costs  as  explained  above.    (See  p.  83.) 


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98 


REPORT   ON    NEWS-PRINT  PAPER   INDUSTRY. 


The  table  shows  little  variation  in  the  average  cost  of  producing 
sulphite  in  the  United  States  and  Canada  combined  during  the 
period  from  1913  to  the  middle  of  1916.  The  average  cost  for  the 
varying  number  of  mills  in  the  United  States  and  Canada  was  $30.64 
per  ton  in  1913,  $30.19  in  1914,  $29.33  in  1915,  and  $29.10  in  the  first 
half  of  1916.  If  the  figures  were  put  upon  a  more  strictly  comparable 
basis,  by  using  the  same  mills  for  each  year,  the  averages  for  1915  and 
the  first  half  of  1916  would  not  be  materially  changed. 

Average  costs  for  second  half  of  i916. — In  December,  1916,  the 
Commission  secured  additional  cost  data  covering  a  part  of  the  year 
since  July  1,  1916,  from  16  mills  making  sulphite  in  the  United 
States.  While  these  costs  covered  periods  ranging  from  three  to  five 
months,  the  average  period  covered  was  about  four  months.  These 
mills  during  the  first  half  of  1916  produced  79  per  cent  of  the  total 
tonnage  included  in  Table  20  above.  No  adjustments  have  been  made 
in  these  figures,  and  the  average  results  are  compared  with  the  costs 
as  shown  on  the  books  of  the  companies  for  the  first  half  of  1916. 
The  average  cost  of  sulphite  for  the  above  16  mills  during  the  latter 
part  of  the  year  was  $1.75  per  ton  higher.  This  was  due  chiefly  to 
the  increase  in  the  cost  of  wood,  sulphur,  labor,  and  repairs.  Com- 
panies buying  pulp  wood  were  paying  materially  ^higher  prices  dur- 
ing the  latter  part  of  1916. 

In  February,  1917,  cost  data  were  secured  from  15  mills  in  the 
United  States  for  the  month  of  December,  1916,  or  January,  1917. 
These  mills  during  the  first  half  of  1916  produced  74  per  cent  of  the 
total  tonnage  included.  The  average  cost  of  sulphite  for  these  mills 
in  this  period  was  $3.38  per  ton  higher  than  the  unrevised  cost  for 
the  same  mills  during  the  first  half  of  1916. 

Percentage  or  cost. — The  percentage  of  the  total  cost  of  produc- 
ing sulphite  attributable  to  particular  items  is  shown  by  Table  21  fol- 
lowing for  United  States  and  Canadian  mills  combined  for  the  years 
1913, 1914,  1915,  and  the  first  half  of  1916. 


COSTS  AND  PROFITS   OF   MANUFACTURE. 


99 


Table  21.— PERCENTAGE  OF  TOTAL  COST  OF  PRODUCING  SULPmTE  ATTRIBUTABLE 
TO  PARTICULAR  ITEMS-UNITED  STATES  AND  CANADIAN  MILLS  COMBINED-191*- 
1916  (FIRST  HALF). 


Item. 


Stock: 

Sulphur 

Lime  and  limestone. 
Wood 


Total. 


Conversion: 

Labor 

Felts 

Wires 

Belting 

Lubricants 

Repairs 

Fuel 

Power  and  water  rentals . 
Miscellaneous 


1913 


Per  cent 

10.38 

2.65 

54.69 


67.72 


Total. 


General  expense: 

Taxes  and  insurance , 

General  and  administrative. 


Total. 


Total  cost» 100.00 


11.32 

.31 

.07 

.39 

.09 

5.61 

8.20 

L24 

1.84 


1914 


Per  cent. 

10.35 

2.49 

54.28 


1915 


67.12 


29.07 


1.25 
1.96 


3.21 


n.38 

.32 

.06 

.36 

.09 

5.43 

7.80 

2.09 

L77 


Per  cent. 

10.21 

2.46 

55.53 


First 
half 
1916. 


68.20 


29.30 


1.28 
2.30 


3.58 


1  Exclusive  of  depreciation. 


100.00 


10.85 

.34 

.06 

.26 

.09 

5.15 

7.33 

2.00 

2.06 


Percent. 
9.77 
2.39 
56.36 


68.52 


28.14 


1.24 
2.42 


3.66 


100.00 


10.30 

.40 

.10 

.32 

.08 

5.36 

7.77 

L91 

2.01 


28.25 


L26 
L97 


3.23 


100.00 


The  cost  of  stock  in  producing  sulphite  represents  about  67.5  per 
cent  of  the  total  cost,  of  which  pulp  wood,  the  principal  material 
used,  represents  about  55  per  cent  and  sulphur  and  limestone  repre- 
sent about  12.5  per  cent. 

The  conversion  cost  represents  from  28  to  29  per  cent  of  the  total 
cost  of  producing  sulphite.  The  principal  items  of  conversion  cost 
are  labor,  which  represents  from  about  10  to  11  per  cent  of  the  total 
cost,  and  fuel,  which  represents  from  about  7  to  8  per  cent  of  the 
total  cost. 

Cost  of  production  of  sui^phite,  by  groups  of  mills. — The  differ- 
ences in  the  costs  of  domestic  sulphite  mills  are  shown  by  Table  22 
below,  which  groups  the  mills  according  to  the  cost  per  ton  and 
shows  the  number  included,  the  tonnage  represented,  the  percentage 
of  the  total  production,  and  the  average  cost  for  each  group  for  the 
years  1913,  1914, 1915,  and  first  half  of  1916. 


i 


100 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS  OF  MANUFACTURE. 


101 


Table  22.— COST  OF  PRODUCTION  OF  SULPmTE  IN  UNITED  STATES  MILLS  COVERED 
BY  THE  INVESTIGATION,  ARRANGED  BY  GROUPS  ACCORDING  TO  COST  PER  TON, 
1913-1916  (FIRST  HALF). 


Group. 


1913. 

I  (less  than  $27)    

n  ($27  and  less  than  $30) 

in  ($30  and  less  than  $33) , 

rv  ($33  and  less  than  $36) 

V  ($36  and  over) 

Total 

1914. 

1  (\tss  than  $27) , 

n  ($27  and  less  than  $30) 

III  ($30  and  less  than  $33) 

IV  ($33  and  less  than  $36) 

V  ($36  and  over) 

Total 

1915. 

I  (less  than  $27) 

IT  ($27  and  less  than  $30) 

in  ($30  and  less  than  $33) 

IV  ($33  and  less  than  $36) 

V  ($36  and  over) 

TotaL 

1916  (first  halO 

I  (less  than  $27) 

n  ($27  and  lass  than  $30) 

in  ($30  and  less  than  $33) 

rv  ($33  and  less  than  $36) 

V  ($36  and  over) 

Total 


Number 
of  mills. 


19 


21 


22 


20 


Pro- 
duced. 


Tons. 
55,986 
29,575 
104,062 
91,423 
24,4g5 


305,531 


60,311 
28,597 
143,064 
73,263 
16,298 


321,533 


82,311 
58,049 
65,825 
86,658 
33,250 


326,093 


28,125 
42,305 
49,571 
43,617 
32,029 


195,647 


Per  cent 
of  total. 


18.3 

9.7 

34.1 

29.9 

&0 


100.0 


18.6 

8.9 

44.5 

22.8 

5.2 


100.0 


25.2 
17.8 
20.2 
26.6 
10.2 


100.0 


14.4 
21.6 
25.3 
22.3 
16.4 


100.0 


Average 

cost  per 

toii.1 


$24.84 
27.52 
31.62 
34.08 
37.65 


31.20 


25.08 
27. 4S 
3L51 
35.36 
36.34 


31.05 


24.67 
28.17 
31.34 
34.79 
38.14 


30.70 


22.97 
27.63 
31.09 
34.06 
36.85 


30.71 


*  Exclusive  of  depreciation. 

While  the  figures  for  the  different  years  are  not  strictly  compar- 
able on  account  of  the  different  number  of  mills  for  which  data 
were  available,  they  show  that  the  percentage  of  sulphite  produced 
by  mills  having  a  cost  less  than  $33  per  ton  was  fairly  uniform,  being 
62  per  cent  in  1913  and  61  per  cent  in  the  first  half  of  1916.  The 
proportion  of  sulphite  produced  by  the  groups  having  a  cost  of  $36 
or  over,  however,  increased  from  8  per  cent  in  1913  to  over  16  per 
cent  in  the  first  six  months  of  1916. 

Section  4.  Ground-wood  costs,  1913-1916. 

All  of  the  companies  operating  news-print  mills  included  in  Table 
16  operate  one  or  more  ground-wood  mills,  and  Table  23  shows  the 
average  cost  of  production  of  ground  wood  for  the  United  States 
mills,  for  Canadian  mills,  and  for  the  United  States  and  Canadian 
mills  combined. 


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102 


REPOBT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS  OF  MANUFACTURE. 


103 


These  average  costs  are  shown  by  items  for  the  years  1913,  1914, 
1915,  and  the  first  six  months  of  1916.  The  costs  do  not  include  a 
depreciation  charge  which,  as  noted  in  section  1,  is  charged  to  the 
news-print  paper  in  which  the  ground  wood  is  used. 

The  table  shows  but  little  change  in  the  average  cost  of  manufac- 
turing ground  wood  between  1913  and  the  first  half  of  1916.  Al- 
though the  same  number  of  mills  is  not  included  in  each  year,  the 
relation  between  the  costs  for  the  various  years  would  not  change 
materially  by  making  the  figures  strictly  comparable  in  this  regard. 

The  cost  of  pulp  wood  is  the  most  important  item,  and  it  should  be 
noted  that  much  of  this  material  used  in  the  first  half  of  1916  was 
purchased  under  old  contracts  made  at  low  prices.  The  next  most 
important  item  in  cost  per  ton  is  labor,  which  in  general  showed  a 
downward  trend  per  ton  both  in  the  United  States  and  in  Canada. 
This  was  no  doubt  due  chiefly  to  the  increased  output  of  the  mills. 

The  cost  of  producing  ground  wood  has  been  higher  in  the  United 
States  than  in  Canada,  the  difference  in  the  first  six  months  of  1916 
being  $3.23  per  ton,  this  being  chiefly  due  to  the  difference  in  the  cost 
of  the  pulp  wood  used. 

Average  costs  for  second  half  of  19 le. — In  Decemjber,  1916,  the 
Commission  secured  cost  data  from  35  mills  in  the  United  States 
covering  a  part  of  the  period  since  July  1, 1916.  The  average  period 
covered  by  these  cost  data  was  about  four  months  but  for  individual 
mills  ranged  from  three  to  five  months.  These  mills  during  the  first 
half  of  1916  produced  75  per  cent  of  the  total  tonnage  included  in  the 
tables.  These  figures  have  not  been  revised  and  are  compared  only 
with  the  average  costs  as  shown  on  the  books  of  the  companies.  The 
average  cost  of  ground  wood  for  all  mills  in  the  latter  part  of  1916 
was  $1.06  per  ton  higher  than  the  average  cost  for  the  same  mills 
during  the  first  half  of  the  year.  The  important  items  which  in- 
creased were  wood,  labor,  and  repairs.  The  increase  in  wood  costs 
for  the  latter  part  of  the  year  was  due  to  the  fact  that  logging  costs 
had  increased  and  materially  higher  prices  were  paid  for  pulp 
wood  purchased  in  1916.  Overhead  expenses  were  also  slightly 
higher  for  the  latter  period,  due  to  the  decrease  in  output  of  several 
of  the  mills  during  the  summer  months. 

Additional  cost  data  were  secured  in  February,  1917,  from  40  mills 
in  the  United  States  for  either  the  month  of  December,  1916,  or  Janu- 
ary, 1917.  These  mills  during  the  first  half  of  1916  produced  79  per 
cent  of  the  total  tonnage  of  the  mills  included.  The  average  cost  of 
ground  wood  for  these  mills  during  this  one-month  period  was  $3.13 
per  ton  higher  than  the  unre vised  cost  for  the  same  mills  during  the 
first  half  of  1916. 


Percentage  of  cost. — The  importance  of  pulp  wood  and  various 
other  items  of  expense  included  in  the  cost  of  producing  ground 
wood  is  shown  by  Table  24,  which  gives  the  percentage  of  the  total 
sost  attributable  to  each  item  for  United  States  and  Canadian  mills 
combined  for  the  years  1913  to  1915  and  first  half  of  1916. 

Table  24.— PERCENTAGE  OF  TOTAL  COST  OF  PRODUCING  GROUND  WOOD  ATTRIBU- 
TABLE TO  PARTICULAR  ITEMS— UNITED  STATES  AND  CANADIAN  MILLS  COM- 
BINED-191^-1916  (FIRST  HALF). 


Item. 

1913 

1914 

1915 

First 
half 
1916. 

Wood 

Percent. 
65.04 

Percent. 
64.86 

Percent. 
67.11 

Percent. 

68.85 

Conversion: 

Labor 

16.38 

.86 

.57 

.19 

.45 

.24 

5.83 

3.87 

2.11 

16.11 

.94 

.57 

.19 

.43 

.22 

5.62 

4.21 

2.25 

15.00 

.82 

.55 

.21 

.35 

.20 

5.07 

4.20 

2.43 

14.12 

.92 

.57 

.27 

.84 

.17 

4.65 

3.98 

2.28 

Stones 

Felts 

Wires 

Belting 

Lubricants 

Repairs 

Power  and  water  rentals 

Miscellaneous 

Total 

30.50 

30.54 

28.83 

27.30 

General  expense: 

Taxes  and  insurance 

1.86 
2.60 

1.78 
2.82 

1.46 
2.60 

1.49 
2.36 

General  and  administrative 

Total 

4.46 

4.60 

4.06 

3.85 

Total  cost » 

100.00 

100.00 

100.00 

100.00 

1  Exclusive  of  depreciation. 

The  cost  of  wood  was  the  chief  item,  representing  69  per  cent  of 
the  total  cost  in  the  first  half  of  1916  and  65  per  cent  in  1913. 
Next  in  importance  in  1916  came  labor  (14  per  cent)  and  repairs 
(4.6  per  cent).  Felts,  wires,  and  belting  taken  together  made  less 
than  2  per  cent  of  the  total  cost  per  ton  of  ground  wood. 

Average  cost  of  producing  ground  wood,  by  groups  of  mills. — The 
differences  in  the  cost  of  production  of  the  domestic  ground-wood 
mills  included  in  the  table  of  average  costs  above  are  shown  by  Table 
25  following,  which  groups  the  mills  into  five  classes  and  shows  the 
number  included,  the  tonnage  represented,  the  percentage  of  the 
total  tonnage,  and  the  average  cost  per  ton  for  each  group  for  the 
years  1913,  1914,  1915,  and  the  first  half  of  1916. 


104 


REPORT  ON  NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS  OF   MANUFACTURE. 


105 


'.,*• 

;'•' 


Table  25.— COST  OF  PRODUCTION  OF  GROUND  WOOD  IN  UNITED  STATES  MILLS  COV- 
ERED BY  THE  INVESTIGATION,  ARRANGED  BY  GROUPS  ACCORDING  TO  COST  PER 
TON,  1913-1916  (FIRST  HALF). 


Group. 


1913. 

I  (less  than  $10.50) 

n  ($10. 50  and  less  than  $12.50) . . .. 

m  ($12.50  and  less  than  $15) 

IV  ($15  and  less  than  $17 

V  (117  and  over) 


Total. 


1914. 

I  (less  than  $10.50) 

n  ($10.50  and  less  than  $12.50).... 

m  ($12.50  and  less  than  $15) 

IV  ($15  and  less  than  $17) 

V  ($17  and  ov«) 


Total. 


1915. 

I  (less  than  $10.50) 

n  ($10.50  and  less  than  $12.50).... 

m  ($12.50  and  less  than  $15) 

IV  ($15  and  less  than  $17) 

V  ($17  and  over) 


Total. 


1916  (first  half). 

I  (less  than  $10.50) 

n  ($10.50  and  less  than  $12.50) 

ni  ($12.50  and  less  than  $15.) 

IV  ($15  and  less  than  $17) 

V  ($17  and  over) 


Total. 


Number 
of  mills. 


1 

3 
12 
15 
14 


45 


1 

4 
13 
21 
11 


50 


Pro- 
duced. 


Tons. 

75,990 
100,346 
193,320 
184,970 
143,596 


698,222 


88,584 
137,689 
127,475 
290,257 
126,012 


770,017 


5 
21 
13 
11 


60 


7 
21 
12 

7 


47 


223,777 

370, 896 

160,995 

89,147 


844,815 


175,339 

209,963 

89,736 

36,205 


511,243 


Per  cent 
of  total. 


10.9 
14.4 
27.7 
26.5 
20.5 


100.0 


11.6 
17.9 
16.5 
37.7 
16.4 


100.0 


26.5 
43.9 
19.1 

las 


100.0 


34.3 

41.1 

17.5 

7.1 


100.0 


Average 

cost  per 

ton.i 


$10.37 
10.99 
13.94 
16.13 
18.40 


14.63 


10.40 
10.97 
14.23 
15.79 
18.29 


14.46 


11.23 
14.23 
16.11 
18.88 


14.29 


n.29 
14.04 
15.97 
18.69 


13.77 


1  Exclusive  of  depreciation. 

The  table  shows  that  the  percentage  of  ground  wood  produced  by 
United  States  mills  having  a  cost  of  over  $17  per  ton  decreased 
during  the  three  and  one-half  year  period.  The  decrease  from  10.5 
per  cent  to  7.1  per  cent  between  1915  and  the  first  half  of  1916, 
however,  might  be  reduced  by  the  inclusion  of  mills  for  which  data 
were  not  available  for  the  latter  period. 

Section  5.  News-print  paper  profits  per  ton. 

Table  26  below  shows  what  changes  have  taken  place  in  the  profits 
per  ton  of  news-print  paper  sold  since  1913,  together  with  the  cost 
of  sales  and  net  selling  prices  for  the  same  mills  in  Canada  and  the 
United  States  from  which  the  cost  figures  shown  in  preceding  sections 
for  news  print,  sulphite,  and  ground  wood  were  obtained. 


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106 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


The  table  shows  the  average  results  for  United  States  mills  and 
Canadian  mills,  and  for  United  States  and  Canadian  mills  combined, 
for  the  years  1013,  1914,  1915,  and  the  first  half  of  1916.  The  table 
shows  the  tons  sold  and  gross  receipts  per  ton,  the  total  amount  of 
deductions  per  ton  from  gross  receipts  for  discounts  and  allowances, 
freight,  storage,  and  cartage,  and  the  net  sales  per  ton  resulting  from 
such  deductions,  the  cost  of  sales  per  ton  including  general  expense 
and  depreciation,  which  is  the  total  cost  of  manufacture  with  inven- 
tory adjustments,  selling  expenses  per  ton,  profits  per  ton,  and  the 
percentage  of  profits  to  net  sales. 

The  average  gross  receipts  per  ton  for  the  varying  groups  of 
United  States  mills  were  lowest  in  1915  at  $42.49  per  ton  and  highest 
m  1913  at  $43.75  per  ton.  The  gross  receipts  for  the  groups  of 
Canadian  mills  covered  in  the  table  were  slightly  lower,  ranging  from 
$41.65  per  ton  in  1915  to  $43.46  per  ton  in  1913.  The  total  deductions 
from  gross  receipts  necessary  to  arrive  at  net  receipts  for  the 
United  States  mills  showed  a  downward  trend  during  the  period, 
ranging  from  $4.25  per  ton  in  1913  to  $4.03  in  the  first  half  of  1916. 
The  total  deductions  for  Canadian  mills  were  slightly  higher,  rang- 
ing from  $5.32  in  1913  to  $4.28  in  the  first  half  of  1916.  This  was 
probably  due  to  the  higher  freight  rates  from  Canadian  mills  to  the 
United  States  market.  Net  receipts  for  the  United  States  mills  de- 
clined from  $39.50  per  ton  in  1913  to  $38.45  per  ton  in  1915,  and  then 
rose  to  $39.40  per  ton  in  the  first  half  of  1916.  Likewise,  net  receipts 
for  the  Canadian  mills  declined  from  $38,14  in  1913  to  $37.34  in 
1915,  and  then  rose  to  $37.96  per  ton  in  the  first  half  of  1916.  The 
net  receipts  for  the  United  States  mills  and  Canadian  mills  com- 
bined declined  from  $39.25  per  ton  in  1913  to  $38.13  in  1915  and  then 
rose  to  $38.98  in  the  first  half  of  1916. 

The  cost  of  sales,  including  general  expenses,  for  Canadian  mills 
and  United  States  and  Canadian  mills  combined,  declined  during 
the  three  and  one-half  year  period  in  the  same  manner  as  the  cost  of 
manufacture  shown  in  section  2.  The  cost  of  sales  for  Canadian 
mills  in  the  first  half  of  1916  was  $4.60  less  than  the  cost  of  sales  for 
United  States  mills. 

Selling  expenses  for  United  States  mills  were  lowest  in  the  first 
half  of  1916  at  59  cents  per  ton  and  highest  in  1915  at  64  cents  per 
ton.  For  Canadian  mills  selling  expenses  were  highest  in  1915  at 
$1.02  per  ton  and  lowest  in  1913  at  86  cents  per  ton.  The  higher 
selling  expense  for  Canadian  mills  was  probably  due  to  the  fact  that 
most  of  them  sell  through  brokers  and  selling  agents  instead  of 
maintaining  their  own  selling  organization. 


COSTS  AND  PROFITS  OF   MANUFACTURE. 


107 


The  average  profit  per  ton  for  the  United  States  mills  included 
|in  the  table  was  lowest  in  1914  at  $4.94  and  highest  in  the  first  half 
of  1916  at  $6.75  per  ton.  The  average  profit  per  ton  for  Canadian 
mills  showed  a  steady  increase  during  the  three  and  one-half  year 
period,  the  lowest  being  $6.45  in  1913  and  the  highest  $9.54  per  ton 
in  the  first  half  of  1916.  This  was  an  increase  of  $3.09  per  ton  over 
the  profit  in  1913  and  $2.79  per  ton  higher  than  the  profit  for  United 
States  mills  in  the  first  half  of  1916.  Combining  the  United  States 
and  Canadian  mills,  the  average  profit  per  ton  was  lowest  in  1914 
I  at  $5.35  and  highest  in  the  first  half  of  1916  at  $7.55. 

The  percentage  of  profit  on  net  sales  for  United  States  mills  ranged 

I  from  12.8  per  cent  in  1914  to  17.1  per  cent  in  the  first  half  of  1916. 

The  percentage  of  profit  on  net  sales  for  Canadian  mills  ranged  from 

16.9  per  cent  in  1913  to  25.2  per  cent  in  the  first  half  of  1916.     For 

I  the  United  States  and  Canadian  mills  combined  the  percentage  of 

I  profit  on  net  sales  ranged  from  13.9  per  cent  in  1914  to  19.4  per  cent 

in  the  first  half  of  1916.    The  rate  of  profit  on  investment  is  shown 

below.     (See  p.  110.) 

As  is  the  case  with  the  cost  tables  in  preceding  sections,  the  profit 
figures  for  each  year  are  not  strictly  comparable  with  respect  to  the 
number  of  mills  included  in  the  averages.  This  may  explain,  in  part 
at  least,  the  decline  in  profits  per  ton  of  United  States  mills  in  1914. 
The  relation  between  the  profits  for  1915  and  the  first  half  of  1916, 
however,  is  not  materially  affected  by  the  difference  in  the  number 
of  mills  included. 

Average  profits  of  United  States  mills,  by  groups. — ^The  dif- 
ferences in  the  profits  per  ton  of  United  States  mills  are  shown  in 
Table  27  below,  which  classifies  the  various  mills  into  six  groups 
and  shows  for  each  the  number  of  mills  included,  the  tonnage  repre- 
sented, the  percentage  of  the  total  tonnage  sold,  and  the  average 
profit  per  ton  for  the  years  1913,  1914,  1915,  and  first  half  of  1916. 
^lills  showing  a  loss  are  included  in  Group  VI. 


I 


<^i 


Ml  > 


108 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


Table  27.-VARIATIONS  IN  THE  PROFITS  PER  TON  OF  NEWS-PRINT  PAPER  SOLD  BY 
UNITED  STATES  MILLS  COVERED  BY  THE  INVESTIGATION,  BY  GROUPS,  1913-1916 
(FIRST  HALF). 


Group. 


1913. 


I  (($12  and  over) 

II  (910  and  less  than  $12). 
in  ($8  and  less  than  $10).. 
rV  ($6  and  less  than  $8)... 

V  ($4  and  less  than  $6)... 
VI  (Less  than  $4) 


Total. 


1914. 


I  ($12  and  over) 

n  ($10  and  less  than  $12). 
ni  ($8  and  less  than  $10).. 
rV  ($6  and  less  than  $8)... 

V  ($4  and  less  than  $6) . . 
VI  (Less  than  $4) 


Total. 


1915. 


I  ($12  and  over) 

n  ($10  and  less  than  $12). 
ni  ($8  and  less  than  $10).. 
IV  ($6  and  less  than  $8)... 

V  ($4  and  less  than  $6)... 
VI  (Less  than  $4) 


Number 
of  mills. 


1 
2 
1 
4 
8 
14 


30 


2 
1 

3 

6 

24 


35 


Total. 


1916  (first  half). 

I  ($12  and  over) 

n  ($10  and  less  than  $12) 

m  ($8  and  less  than  $10) 

TV  ($6  and  less  than  $8) 

V  ($4  and  less  than  $6) 

VI  (Less  than  $4) 


Total. 


1 

7 

5 

6 

16 


35 


Tons 
sold. 


65,435 
125,783 

42,156 
141,981 
232, 144 
346,558 


954,057 


Percent 

of  total 

salts. 


6.0 

13.2 

4.4 

14.9 
24.3 
36.3 


100.0 


188,983 
58,696 

160,832 
85,759 

571,358 


1,065,628 


17.7 
5.5 

15.1 
8.1 

53.6 


100.0 


Average 

profit  per 

ton. 


$12.00 
10.41 
9.81 
7.14 
4.73 
1.90 


5.53 


10.15 
9.16 
7.11 
6.61 
2.07 


4.94 


114.749 
312,457 
90,493 
169,885 
359, 8«3 


1,047,427 


11.0 
29.8 
8.6 
16.2 
34.4 


100.0 


3 
4 

3 

5 

7 

12 


34 


58,683 
65,830 

135,202 
«8,999 
74.728 

142,994 


546.436 


10.7 
12.0 
24.7 
12.6 
13.8 
26.2 


100.0 


10.37 
9.07 
6.99 
4.92 
1.03 


5.60 


12.68 
10.74 
9.36 
6.87 
4.64 
1.08 


6.75 


The  above  table  shows  that  in  1913  the  range  of  profits  by  groups 
was  from  $12  per  ton,  high,  for  one  mill  to  $1.90  per  ton,  low,  for  14 
mills  combined.  Two  mills  included  in  Group  VI  showed  a  loss  of 
about  28  cents  per  ton.  The  average  profit  for  all  30  mills  was 
$5.53  per  ton.  Of  the  total  tonnage  included,  39.4  per  cent  was  sold 
at  an  average  profit  of  more  than  $6  per  ton,  while  36.3  per  cent  was 
sold  at  a  profit  of  less  than  $4  per  ton. 

The  range  of  profit  by  groups  in  1914  was  from  $10.15  per  ton  for 
2  mills  to  $2.07  per  ton  for  24  mills  combined  in  Group  VI.  The 
highest  profit  for  an  individual  mill  was  $10.35  per  ton,  while  of  the 


COSTS  AND  PROFITS   OF   MANUFACTURE, 


109 


mills  included  in  Group  VI  5  operated  at  a  loss,  the  loss  in  1  mill 
being  as  much  as  $1.94  per  ton.  The  average  profit  for  all  35  mills 
was  $4.94  per  ton.  Of  the  total  tonnage,  38.3  per  cent  was  sold  at  an 
average  profit  exceeding  $6  per  ton,  while  53.6  per  cent  was  sold  at 
a  profit  of  less  than  $4  per  ton. 

In  1915  the  average  profit  by  groups  ranged  from  $10.37  per  ton 
for  1  mill  to  $1.03  per  ton  for  16  mills.  Of  the  mills  included  hi 
the  latter  group,  5  showed  a  loss  during  the  year.  The  highest 
individual  profit  for  any  mill  was  $10.37  per  ton,  while  1  mill  showed 
a  loss  of  $7.19  per  ton.  Of  the  total  tonnage  represented,  49.4  per 
cent  was  sold  at  an  average  profit  of  above  $6  per  ton,  while  34.4 
per  cent  was  sold  at  an  average  of  less  than  $4  per  ton.  The  average 
profits  for  any  mill  did  not  exceed  $12  per  ton  in  1914  or  1915. 

In  the  first  half  of  1916  the  range  of  profit  by  groups  was  from 
$12.58  per  ton  for  3  mills  combined  to  $1.08  per  ton  for  12  mills. 
Of  the  mills  included  in  the  latter  group,  3  showed  a  loss.  The  aver- 
age loss  in  1  mill  was  $6.30  per  ton.  The  highest  profit  shown  in  any 
individual  mill  was  $13.08  per  ton.  The  average  profit  for  all  34 
mills  was  $6.75  per  ton,  or  $1.15  per  ton  more  than  in  1915.  Of  the 
total  tonnage,  60  per  cent  was  sold  at  an  average  profit  exceeding 
$6  per  ton,  while  26.2  per  cent  was  sold  at  a  profit  of  less  than  $4 
per  ton. 

If  the  Canadian  mills  were  classified  in  the  same  manner,  1  would 
have  been  included  in  Group  I,  in  1913,  4  in  Group  IV,  and  2  in 
Group  VI.  In  1914,  of  the  9  mills  whose  average  profit  was  $6.62 
per  ton,  1  would  have  been  included  in  Group  I,  1  in  Group  III,  2 
each  in  Groups  IV  and  V,  and  3  in  Group  VI.  In  1915,  of  the  11 
Canadian  mills  with  an  average  profit  of  $8.13  per  ton,  2  would  have 
been  included  in  Group  1, 1  in  Group  III,  5  in  Group  IV,  2  in  Group 

V,  and  1  in  Group  VI.  In  the  first  half  of  1916,  of  the  10  mills  with 
an  average  profit  of  $9.55  per  ton,  2  would  have  been  included  in 
Group  I,  1  in  Group  II,  4  in  Group  III,  1  in  Group  IV,  and  2  in 
Group  VI.  The  average  profits  for  Canadian  mills  covered  by  the 
investigation  in  the  first  half  of  1916  exceeded  the  average  profits  in 
1915  by  $1.42  per  ton. 

The  average  profit  of  15  additional  mills  in  the  United  States  not 
included  in  the  profit  tables  above,  from  which  data  were  obtained 
largely  by  correspondence  without  revision  by  the  Commission,  was 
only  56  cents  per  ton  in  1915.  If  grouped  according  to  the  classification 
shown  in  Table  27,  1  mill  would  fall  in  Group  V  and  14  in  Group 

VI,  5  of  which  showed  a  loss  in  this  year.  In  the  first  half  of  1916 
the  average  profit  for  these  mills  as  reported  to  the  Commission  had 
mcreased  to  $2.35  per  ton.  Classified  by  groups,  1  mill  would  fall  in 
Group  IV,  1  in  Group  V,  and  12  in  Group  VI.  Only  1  mill  of  this 
group  of  15,  however,  showed  a  loss  in  this  half  year. 


i      '^i?' 


110 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS   OF   MANUFACTURE. 


Ill 


These  15  additional  mills  have  a  combined  tonnage  representing  a 
little  less  than  13  per  cent  of  the  total  domestic  production.  If  they 
were  included  in  the  table  of  average  profits  per  ton,  the  figures  for 
1915  and  the  first  half  of  1916  would  represent  about  95  per  cent 
and  93  per  cent,  respectively,  of  the  total  domestic  production.  The 
average  profit  per  ton,  including  these  mills,  would  be  $4.94  in  1915 
and  $6.15  in  the  first  half  of  1916. 

Section  6.  Profits  on  investment. 

The  Commission  found  it  impracticable  in  some  cases  and  im- 
possible in  others  to  determine  the  actual  cost  of  investment  of  the 
properties  of  domestic  news-print  companies,  which  is  the  only  true 
basis  for  reckoning  the  rates  of  profit.  Many  of  the  companies  have 
been  reorganized,  and  the  original  records  are  not  obtainable,  and  in 
others,  in  order  to  arrive  at  the  original  cost  of  the  properties  acquired, 
it  would  have  been  necessary  to  examine  the  financial  statements  of  the 
companies  for  several  years.  It  was  also  found  impracticable  to  sepa- 
rate the  investment  in  the  news-print  branch  of  the  business  from 
the  total  investment.  The  total  revised  earnings,  therefore,  are  com- 
pared with  the  total  net  book  investment,  after  making  such  revisions 
as  the  available  information  permitted. 

Comparable  financial  statements  were  secured  from  15  companies 
in  the  United  States  for  the  years  1915  and  1916.  The  total  net  book 
investment  of  these  companies  in  1915  was  about  $140,000,000,  while 
the  investment  as  revised  by  the  Commission  was  about  $116,000,000. 
The  companies  included  produced  in  1915  about  90  per  cent  of  the 
tonnage  represented  in  the  cost  tables  and  about  75  per  cent  of  the 
total  production  in  the  United  States. 

The  total  net  book  investment  is  obtained  by  combining  the  book 
value  of  the  real  estate,  buildings,  equipment,  etc.,  incidental  to  the 
paper  and  pulp  mills,  the  book  value  of  the  timberlands  and  water- 
power  properties,  and  the  working  capital  (accounts  and  bills  receiv- 
able and  cash  less  bills  and  accounts  payable)  as  carried  on  the  books 
of  the  companies.  Investments  in  sawmills,  industrial  railroads,  etc., 
are  also  included,  since  the  total  earnings  of  the  companies  are  in- 
cluded. Where  a  reserve  for  depreciation  was  made  this  amount  has 
been  deducted,  since  a  liberal  charge  for  depreciation  has  been  allowed 
in  costs. 

The  Commission  has  revised  the  book  investment  of  certain  of  these 
companies  where  information  obtained  showed  inflations  in  capital. 
For  example,  it  was  admitted  by  an  officer  of  one  large  company 
that  the  original  common  stock  of  his  company  did  not  represent 
tangible  property.  In  other  cases  it  was  apparent  that  the  invest- 
ment in  timberlands  or  water-power  properties  had  been  writtan  up, 


v^hile  one  company  carried  an  item  of  good  will  on  its  books  which 
did  not  represent  any  investment  cost. 

Table  28  below  gives  the  rates  of  profit  on  the  net  book  investment 
as  shown  by  the  companies  and  on  the  net  investment  as  revised  by 
the  Commission  for  the  year  1915  and  the  first  half  of  1916. 

Table  28.— RATES  OF  PROFIT  ON  NET  INVESTMENT  OF  15  UNITED  STATES  COMPANIES, 

1915-1916  (FIRST  HALF). 

[Revised  earnings  are  compared  with  net  investment  as  shown  by  the  books  and  with  net  investment, 

as  revised  by  the  Commission.] 


Company. 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

n 

12 

13 

14 

15 

All  companies  combined 


1915 


On  in- 
vestment 
as  shown 
by  books 


*g.4 
8.1 
*1L9 
9.0 
1.1 
5.0 

12.1 
8.8 
5.2 

13.5 
3.8 
6.8 
2.0 
1.5 

11.2 


5.4 


On  in- 
vestment 
as  revised 
by  Com- 
mission. 


*£.4 

10.8 

»1}.9 

9.0 

1.1 

5.0 

12.1 
8.8 
8.0 

13.5 
5.2 
8.5 
2.0 
1.5 

11.2 


6.5 


First  half  1916.1 


On  in- 
vestment 
as  shown 
by  b«oks. 


*g.6 

11.9 

14.4 

19.3 

6.0 

7.6 

23.0 

8.6 

4.9 

11.8 

»6.0 

11.6 

9.4 

5.5 

11.6 


7.9 


On  in- 
vestment 
as  revised 
by  Com- 
inission. 


»g.6 

15.8 

14.4 

19.3 

6.0 

7.6 

23.0 

8.6 

7.5 

11.8 

»8.2 

14.5 

9.4 

5.5 

11.6 


9.5 


» Annual  rate  for  the  6-months'  period  of  1916  is  shown 

*  Figures  in  italics  indicate  losses. 

3  Earnings  of  this  company  for  the  first  half  of  1916  include  no  revenue  from  sources  other  than  Tpill 
operations.  This  revenue  in  1916  was  about  0.7  per  cent  on  the  company's  entire  investment.  Depre- 
ciation and  bond  interest  were  computed  on  basis  of  the  year  1915. 

The  revised  rate  of  profit  for  the  15  companies  combined  was  6.5 
per  cent  in  1915  and  at  the  annual  rate  of  9.5  per  cent  in  the  first 
half  of  1916.  The  corresponding  rates  on  the  investment  shown 
by  the  books  were  5.4  in  1915  and  at  the  annual  rate  of  7.9  per  cent 
in  the  first  half  of  1916. 

The  rate  of  earnings  of  the  individual  companies  on  the  invest- 
ment as  revised  by  the  Commission  ranged  in  1915  from  a  loss  of 
11.9  per  cent  for  1  company  to  a  profit  of  13.5  per  cent  for  another 
company,  and  exceeded  8  per  cent  in  the  case  of  8  of  the  15  com- 
panies. In  the  first  half  of  1916  the  rate  of  earnings  based  on  the 
revised  investment  ranged  from  a  loss  of  2.6  per  cent  for  one  com- 
pany to  a  profit  of  23  per  cent  for  another  company.     The  rate  of 


112 


REPORT  ON   NEWS-PRINT  PAPER   INDUSTRY. 


COSTS  AND  PROFITS  OF   MANUFACTURE. 


113 


i 


profit  exceeded  8  per  cent  in  the  case  of  10  companies  during  this 
year. 

The  average  rates  of  profit  on  investment  in  1915  and  in  the  first 
half  of  1916  (6.5  per  cent  and  9.5  per  cent,  respectively,  as  revised 
by  the  Commission)  are  the  rates  earned  on  the  companies'  entire 
business,  including  paper  other  than  news  print.  An  analysis  of 
the  earnings,  taking  into  account  the  fact  that  the  1916  figures  cover 
only  six  months,  shows  that  the  50  per  cent  increase  was  due  to  an 
increase  of  20  per  cent  in  news  print  earnings  and  of  192  per  cent 
on  other  business.  As  the  profits  per  ton  realized  on  some  other 
grades  of  paper  were  higher  than  on  news  print,  the  rates  shown 
in  the  table,  especially  in  1916,  are  above  those  actually  attributable 
to  news  print  paper  alone. 

From  the  foregoing  data  it  is  apparent  that,  on  the  average,  net 
earnings  in  the  news  print  business  in  1915  were  comparatively  low. 
However,  it  is  probable  that  the  rates  of  profit,  if  based  on  the  actual 
cost  of  investment,  would  be  somewhat  higher  than  those  shown  in 
the  table.  The  net  book  investment,  excluding  outside  investments, 
averaged  about  $35,000  per  ton  of  daily  output,  and  on  the  revised 
investment  about  $30,000  per  ton  of  daily  output.  The  Tariff  Board, 
in  its  report  ^  on  the  industry,  stated  that  for  an  investment  for  power 
and  fully  equipped  and  balanced  plant  $17,000  to  $20,000  per  ton 
of  daily  output  should  be  taken  as  a  liberal  estimate.  To  this,  how- 
ever, must  be  added  provision  for  working  capital  and  woodlands, 
which  brings  the  total  estimated  investment  up  to  between  $25,000 
and  $30,000  per  ton  of  daily  output.  According  to  statements  made 
by  manufacturers  and  opinions  of  experts,  such  an  allowance  for  a 
well-balanced  mill,  including  working  capital  and  necessary  wood- 
lands, is  ample.  On  the  $25,000  basis  the  average  rates  of  profit 
shown  in  Table  28  for  total  operations  of  15  companies  would  have 
been  about  7.5  per  cent  in  1915  and  about  11.5  per  cent  in  the  first 
half  of  1916.  On  the  news  print  operations  of  these  companies  alone 
the  rate  of  profit  in  the  first  half  of  1916  could  hardly  have  been  as 
much  as  10  per  cent  even  on  the  $25,000  basis.  Furthermore,  avail- 
able information  that  is  not  of  a  comparable  character  indicates  that 
the  average  rate  of  profit  realized  by  the  entire  domestic  news  print 
industry  was  somewhat  less  than  is  shown  in  Table  28. 

In  this  connection  the  effect  of  the  advance  in  prices  of  news  print 
should  be  noted.  Both  in  1915  and  the  first  half  of  1916  there  were 
24  mills  in  the  United  States  which  were  making  85  per  cent  of  the 
total  domestic  output  at  costs  varying,  in  round  numbers,  from  $25 
to  $35  per  ton.  The  bulk  of  their  output  is  now  being  sold  on  an- 
nual contracts  at  prices  ranging  from  $60  to  $70  per  ton.    Evidently 

>  Pulp  and  News  Print  Paper  Industry ;  S.  Doc.  31,  62d  Cong..  1st  sess.,  p.  78. 


such  prices  provide  a  margin  of  $25  to  $45  per  ton  over  the  above 
costs.  This  margin,  of  course,  must  take  care  of  increased  costs  be- 
fore any  increase  in  profits  is  obtained.  Costs  have  increased  in  a 
few  peculiarly  unfortunate  mills  as  much  as  $15  per  ton.  An  increase 
of  that  amount  in  all  of  the  24  mills  is  practically  impossible  unless 
some  unforeseen  calamity  changes  the  situation  entirely.  But  even 
for  the  high  cost  mills  present  prices  provide  a  margin  of  profit  of 
from  $10  to  $30  per  ton  as  compared  with  the  margins  of  $4.94  to 
$6.75  per  ton  shown  in  Table  26. 

Further,  it  should  be  noted  that  under  normal  conditions  each 
dollar  added  to  the  net  margin  between  cost  and  price  adds  about  1 
per  cent  to  the  rate  of  profit  on  an  investment  of  $30,000  per  ton  of 
daily  output.  Consequently,  even  if  there  should  be  a  general  in- 
crease in  costs  of  $15  per  ton,  these  mills,  without  pushing  their 
machines  above  a  normal  output,  would,  at  present  prices,  realize 
profits  ranging  from  10  per  cent  to  more  than  30  per  cent  on  in- 
vestment. 

Section  7.  Conclusions. 

There  was  no  marked  change  in  the  average  cost  of  producing 
news-print  paper  in  the  United  States  and  Canada  during  the 
period  from  January  1,  1913,  to  June  30,  1916,  covered  by  the  Com- 
mission's investigation.  The  prevailing  impression  that  this  cost 
had  increased  considerably  in  the  first  half  of  1916  was  chiefly  due 
to  the  much  advertised  increase  in  wages  and  the  high  market  prices 
of  some  of  the  materials  necessary  to  the  manufacture  of  news 
print.*  Account  was  not  taken  of  the  fact  that  a  large  part  of  the 
actual  cost  of  making  the  paper,  even  in  the  last  half  of  1916,  was 
determined  by  contracts  signed,,  wages  paid,  and  expenses  incurred 
in  1914  and  1915,  when  prices  were  at  their  lowest  ebb.  Most  of  the 
pulp  wood  used  in  1916  was  cut  during  the  two  preceding  years  and 
most  of  the  sulphite  purchased  in  1916  by  mills  not  having  their 
own  digesters  was  on  contracts  at  1915  prices.  The  same  was  gen- 
erally true  of  coal  and  other  materials.  The  cost  in  1916,  as  shown 
by  the  accounts,  was  also  kept  down  by  making  a  paper  that  con- 
tained a  smaller  proportion  of  the  relatively  expensive  materials, 
such  as  sulphite,  colors,  and  chemicals,  than  had  been  used  formerly. 
The  greatly  increased  production  also  tended  to  reduce  the  cost  per 
ton  for  various  items  of  expense. 

The  limited  investigation  which  the  Commission  was  able  to  make 
of  conditions  in  the  last  half  of  1916  showed  that  current  high  costs 
of  materials  and  labor  were  beginning  to  increase  the  average  cost  of 
producing  news  print.    Nevertheless,  it  does  not  appear  probable 

*The  details   regarding  the   Increased   cost  propaganda  promoted  by   the   News-Print 
Mannfaetnrers  Association  are  discussed  elsewhere  (see  Chap.  VII). 

88569'— 17 8 


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Mi 


114 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


COSTS  AND  PROFITS  OF  MANUFACTURE. 


115 


that  the  increase  in  cost  for  the  last  half  of  the  year  over  the  first 
could  generally  have  exceeded  $2  to  $4  per  ton  of  paper. 

The  Commission  does  not  attempt  to  forecast  the  future  course  of 
news  print  costs.  Certain  important  factors  affecting  it,  however, 
should  be  considered.  The  high  cost  of  labor  and  materials  is  al- 
ready in  effect  in  many  mills.  In  others  it  has  only  recently  begim  to 
show  in  the  cost  of  the  finished  paper;  but  in  mills  producing  a  con- 
siderable part  of  the  total  product  it  will  probably  not  reach  its  full 
effect  before  new  low  cost  factors  such  as  increased  number  of 
domestic  pulp  mills  and  increasing  imports  of  foreign  pulp  will  have 
reduced  costs  in  the  present  high  cost  mills. 

It  does  not  appear  that  the  average  cost  of  news-print  paper  will 
advance  to  a  level  corresponding  to  the  spot  prices  of  its  constituent 
elements  during  1916,  unless  very  abnormal  and  unexpected  condi- 
tions develop. 

Two  points  affecting  news-print  manufacturers  in  the  United 
States  should  be  pointed  out:  First,  the  cost  of  news  print  in  Can. 
ada,  which  covers  about  26  per  cent  of  the  total  supply  of  the  United 
States,  is  from  $4  to  $5  less  per  ton  than  in  this  country.  Second, 
some  of  the  large  publishers  are  already  making  their  own  news 
print,  and  it  is  probable  that  others  of  equal  financial  ability  will 
build  mills  rather  than  for  any  length  of  time  pay  prices  in  excess 
of  cost  of  production  plus  a  fair  return  on  investment. 

The  prices  made  by  the  manufacturers  at  the  end  of  1916  did  not 
take  full  account  of  the  situation  as  outlined  above.  It  is  clear  that 
the  open-market  prices  during  the  last  two  or  three  months  in  1916, 
and  from  then  to  the  present  time,  have  in  many  cases  been  extor- 
tionate. The  contract  prices  charged  many  newspapers,  especially 
the  smaller  daily  and  weekly  publications,  have  also  been  excessively 
high.  Such  prices  have  in  not  a  few  cases  been  over  $75  a  ton  and 
have  ranged  as  high  as  $100  and  $110.  A  comparison  of  advances 
in  price  with  advances  in  cost  of  production  shows  an  enhancement 
in  the  former  much  greater  than  the  increase  in  the  latter. 

These  excessively  high  prices  ignored  the  public  interest,  which 
requires  the  maintenance  of  news-print  prices  both  on  a  reasonable 
level  and,  except  for  reasonable  differences  in  quantity,  freight,  etc.. 
on  a  parity  between  different  publishers.  It  appears,  moreover,  that 
these  prices,  in  opposition  to  the  long-time  interests  of  the  manufac- 
turers themselves,  tended  to  increase  investment  in  news-print  manu- 
facture by  newspaper  publishers,  to  increase  competition  from 
abroad,  and  to  cause  the  immediate  use  of  pulp-wood  reserves  that 
would  not,  at  lower  prices,  be  thrown  upon  the  market  during  1917. 

The  prices  of  $65  per  ton  or  more  on  contracts  made  with  larger 
newspapers  toward  the  end  of  1916,  and  now  being  charged,  are 
also  excessively  high  in  comparison  with  costs,  if  a  few  mills  of 


small  tonnage  and  exceptionally  high  costs  are  left  out  of  considera- 
tion. It  should  be  emphasized  that,  in  such  times  of  abnormal  costs 
and  prices,  panic  demand,  and  temporary  decline  in  stocks,  the 
exaction  of  long-term  contracts  at  inflexible  prices  is  not  only  con- 
trary to  the  public  interest  but  is  also  unreasonable  from  a  business 
standpoint.  With  the  restoration  of  more  normal  conditions  such 
terms  are  almost  certain  to  become  unreasonable  to  the  purchaser. 
If,  on  the  other  hand,  costs  were  to  increase  further  than  anticipated 
or  a  scarcity  arise  the  seller  might  be  injured.  Under  the  existing 
circumstances- the  best  arrangement  would  be  to  make  contracts  on 
a  sliding  scale  based  on  cost,  provided  the  base  price  were  fair  and 
the  terms  of  the  contract  were  otherwise  reasonable. 

At  least  two  companies,  one  of  which  has  a  very  large  produc- 
tion, have  generally  refused  to  follow  the  excessive  prices  now  often 
charged,  and  have  contracted  to  sell  most  of  their  1917  production 
for  from  $10  to  $18  per  ton  below  the  most  usual  contract  price  of 
$65.  They  have  apparently  acted  according  to  their  best  business 
judgment  and  have  refused  to  take  advantage  of  the  extreme  neces- 
sity of  their  customers  for  the  purpose  of  exacting  the  highest  possi- 
ble price. 

In  the  Conmiission's  judgment  the  present  prices  of  news-print 
paper  are  above  what  is  requisite  for  a  profitable  development  of 
the  industry.  It  is  clear,  therefore,  that  they  can  not  be  long  main- 
tained except  by  a  monopolistic  control  of  the  market. 


Jk^- 


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CHAPTER  VI. 
SXTPPLY  AND  DEMAND  FACTORS. 

Section  1.  Introduction. 

This  chapter  presents  the  information  collected  by  the  Commission 
with  respect  to  the  demand  for  news-print  paper  in  1916  as  compared 
with  prior  years  and  the  supply  available  to  satisfy  this  demand. 

Business  prosperity  in  the  United  States  in  1916  caused  an  unusual 
domestic  demand  not  only  for  news-print  paper  but  for  all  grades 
of  paper,  and  the  European  war,  by  curtailing  the  production  abroad, 
caused  an  increased  demand  by  foreign  buyers  in  the  markets  of  the 
United  States  and  Canada.  The  result  was  a  considerable  increase 
in  domestic  consumption  and  a  relatively  large  increase  in  exports. 

The  output  of  United  States  mills  which,  as  shown  in  Chapter  II, 
declined  in  1914  and  1915,  showed  a  considerable  increase  in  1916, 
and  the  output  of  Canadian  mills,  most  of  which  is  sold  in  the  United 
States,  showed  a  large  increase  in  1916  over  1915,  resulting  in  greatly 
increased  exports  to  this  country.  It  appears,  however,  that  the 
increase  in  the  supply  coming  from  United  States  and  Canadian 
mills  was  not  sufficient  to  meet  the  combined  domestic  and  foreign 
demand,  for  stocks  on  hand  declined  almost  steadily  throughout 
the  year  1916.  The  changes  which  occurred  in  production,  imports, 
exports,  and  stocks  on  hand  during  the  years  1915  and  1916  are 
shown  by  Table  29,  following. 

Table  29.— STATISTICS  OF  PRODUCTION,  IMPORTS,  EXPORTS  AND  STOCKS  OF  NEWS- 
PRINT PAPER  IN  THE  UNITED  STATES,  1915-1916. 


mBS=    1                                            =^ 

1915 

1916 

Percent 
of  in- 

Items. 

First 
half. 

Second 
hall. 

Entire 
year. 

First 
half. 

Second 
half.i 

Entire 
year. 

crease  of 

year  1916 

over  1915. 

Stocks  at  beginning  of  period .... 
DnTnp<jtip  nroduction 

Tom. 
91,650 

608,235 

166,842 

Tons. 

630,887 
201,567 

Tont. 
91,650 

1,239,122 

368,409 

Tom. 
68,912 

673,737 

237,179 

Tom. 
58,572 

681,459 

231,051 

Tons. 
68,912 

1,355,196 

468,230 

9.4 

hnnActK-     ................ 

27.1 

Total 

866,727 
25,752 

909,978 
29,410 

1,699,181 
55,162 

979,828 
34,213 

971,082 
42,115 

1,892,338 
76,328 

11.4 

ExDorts  ..........•.»•«••..••.•• 

38.4 

Avaflable  for  consumption 

840,975 
77,C24 

880,568 
68,912 

1,644,019 
68,912 

945,615 
58,572 

928,967 
42,432 

1,816,010 
42,432 

10.5 

OvOOJfLS  l*i>  ouu  ui  i/o«»»A*. ........ 

Indicated  consumptioo . . . 

763,451 

811,656 

1,575,107 

887,013 

886,535 

1,773,678 

12.6 

SUPPLY  AND  DEMAND  FACTORS.  117 

The  table  shows  that  domestic  production  increased  during  each 
half-year  period,  beginning  with  the  middle  of  1915.  The  increase 
for  the  year  1916  over  1915  was  9.4  per  cent.  Imports  also  showed 
large  increases  for  each  half-year  period,  the  increase  in  1916  over 
1915  being  27.1  per  cent.  Exports  showed  an  even  greater  relative 
increase,  the  quantity  exported  in  1916  being  38.4  per  cent  greater 
than  in  1915.  This  was  only  5.6  per  cent  of  the  domestic  pro- 
duction, however,  as  compared  with  4.5  per  cent  in  1915.  Stocks 
on  hand  decreased  from  91,650  tons  at  the  beginning  of  the  year 
1915  to  42,432  tons  at  the  close  of  the  year  1916,  a  total  decrease 
of  49,218  tons  in  two  years.  The  increase  in  the  indicated  con- 
sumption in  1916  over  1915  was  198,471  tons,  or  12.6  per  cent. 
This  increase  was  about  double  the  normal  annual  increase,  which 
is  estimated  at  6  per  cent.  Information  obtained  by  the  Commis- 
sion indicates  that  neither  the  domestic  nor  the  foreign  demand 
was  entirely  satisfied  by  the  quantity  consumed  or  exported. 

The  percentage  of  increase  of  the  indicated  consumption  by  half- 
year  periods  was  as  follows : 

Per  cent. 

Second  half  of  1915  over  first  half  of  1915 6.  3 

First  half  of  1916  over  second  half  of  1915 9.  3 

First  half  of  1916  over  first  half  of  1915 16.  2 

The  indicated  consumption  for  the  second  half  of  1916  was  very 
nearly  the  same  as  for  the  first  half.  Reports  furnished  the  Commis- 
sion by  92  large  daily  papers  showed  that  their  receipts  of  paper 
on  contract  during  the  first  half  of  1916  were  about  13  per  cent 
greater  than  for  the  first  half  of  1915.  In  addition,  some  of  them 
purchased  considerable  quantities  in  the  open  market,  which  would 
probably  bring  the  increase  in  receipts  up  to  the  16  per  cent  shown 
above. 

Reports  of  shipments  to  customers  on  contract,  obtained  from  the 
principal  news-print  manufacturers  of  the  United  States  and  Can- 
ada, show  that  323  newspapers  consumed  more  than  50  per  cent  of 
the  total  indicated  domestic  consumption  in  each  half-year  period 
since  July  1,  1915.  The  following  tabulation  gives  the  figures  in 
detail : 


Period. 


1915,  second  half 
1916: 

First  half... 

Second  half. 


Ship, 
ments  to 
323  pa- 
pers. 


Tom. 
435,360 

473,098 
454,999 


Total 
indicated 
consump-j 

tion. 


Tom. 
811,656 

887,043 
886,535 


Per  cent- 
age  of 
total. 


53.6 

53.3 
51.3 


4 


* 


i 


1  Deoemher  fl^ares  for  prodoctioa  and  stocks  estimated. 


lie 


.U^i^  M 


"Ty't-^t^T'T': 


L'^ijiaal 


118 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


The  tabulation  shows  an  increase  in  shipments  to  the  323  papers 
for  the  first  half  of  1916  over  the  preceding  half-year  period  of 
nearly  9  per  cent.  This  is  about  the  percentage  of  increase  for 
the  indicated  consumption  as  shown  above.  The  shipments  by 
mills  to  these  323  publications  show  a  falling  off  of  about  18,000 
tons  during  the  second  half  of  1916,  while  the  total  indicated  con- 
sumption during  the  second  half  of  1916  was  approximately  equal 
to  that  of  the  first  half.  This  is  probably  explained  by  the  fact 
that  in  the  second  half  of  1916  the  323  publishers  bought  more  paper 
in  the  open  market  than  they  did  in  the  first  half,  either  because 
the  mill  shipments  did  not  meet  their  requirements  or  their  contracts 
had  expired  and  were  not  renewed. 

Section  2.  Causes  of  domestic  demand. 

The  increased  demand  by  newspaper  publishers  in  the  United 
States  in  1916  was  due  both  to  an  increase  in  circulation  and  to  an 
increase  in  the  number  of  pages  per  issue.  The  increase  in  circulation 
resulted  partly  from  the  interesting  character  of  the  news  during 
the  year,  there  being  an  unusually  large  number  of  important  news 
subjects,  such  as  the  European  war,  Mexican  troubles,  railroad  strikes, 
presidential  campaign,  etc.  The  increase  in  the  number  of  pages 
per  issue  was  due  to  enlarged  space  for  both  reading  matter  and 
advertising  matter  but  the  latter  seems  to  have  been  the  more  im- 
portant cause.  Reports  from  newspapers  indicate  that  the  pros- 
perity of  the  country  in  1916  was  accompanied  by  a  very  large  in- 
crease in  the  demand  for  advertising  space. 

In  addition  to  the  demand  from  newspaper  publishers  there  was 
also  an  increased  demand  for  paper  for  commercial  purposes,  and  a 
substitution  of  news  print  for  book  paper  by  some  magazines  and 
periodicals,  because  of  the  greatly  increased  cost  of  book  paper. 

The  domestic  demand  for  news  print  paper  in  1916  was  intensified 
by  the  development  of  a  virtual  panic  among  publishers  who  were  not 
protected  by  contract  in  their  requirements,  so  that  it  gave  the  ap- 
pearance of  being  much  greater  than  it  really  was. 

Increase  in  circulation. — The  growth  in  circulation  of  news- 
papers is  shown  by  Table  30  below,  compiled  from  sworn  returns  of 
124  daily  newspapers  to  the  Post  Office  Department.  The  figures 
shown  represent  the  average  daily  paid  circulation  for  six  months' 
periods  from  April  1,  1913,  to  October  1,  1916,  and  include  news- 
papers with  a  circulation  of  50,000  or  more  published  in  cities  of 
100,000  population  or  over,  which  have  furnished  statements  for  the 
entire  period.  One  hundred  and  fourteen  of  these  publications  were 
in  the  English  language  and  10  in  foreign  languages.  The  figures 
for  44  of  the  papers  include  Sunday  issues.    The  percentages  of  in- 


■^ 


SUPPLY  AND  DEMAND  FACTORS. 


119 


crease  are  based  upon  the  average  daily  circulation  for  the  period 
ending  April  1,  1913. 

Table  30.— AVERAGE  DAILY  CIRCULATION  OF  114  NEWSPAPERS  IN  ENGLISH  AND 
10  IN    FOREIGN    LANGUAGES    WITH   A    CIRCULATION  EXCEEDING    50,000   COPIES 
1913-1916. 


Total  English  and  foreign. 

Total  114  English. 

Total  10  foreign. 

Six  months'  period  end- 
ing— 

Circulation. 

Per  cent  of 

increase 

over  six 

months' 

period 

ending 

Apr.  1, 

1913. 

Circulation. 

Per  cent  of 

increase 

over  six 

months' 

period 

ending 

Apr.  1, 

1913. 

Circulation. 

Per  cent  (rf 

increase 

over  six 

months' 

period 

ending 

Apr.  1, 

1913. 

Apr.  1,1913 

13,185,708 
13,445,022 
13, 700,*957 
14,815,094 
14,872,576 
15,371,809 
15,335,885 
15,969,150 

12,599,073 
12,848,063 
12,959,978 
13,957,128 
13,878,557 
14,379,881 
14,372,351 
14,989,007 

586,635 
596,959 
740,979 
857,966 
994,019 
991,928 
963,534 
980,143 

Oct.  1,1913 

2.0 
3.9 
12.4 
12  8 
16.6 
16.3 
21.1 

2.0 
2.9 
10.8 
10.2 
14.1 
14.1 
19.0 

L8 
26.3 
46.3 
69.4 
69.1 
64.2 
67.1 

Apr.  1, 1914 

Oct.  1,1914 

Apr.  1,1915 

Oct.  1,1915 

Apr.  1,1916 

Oct.  1,1916 

The  table  shows  that  the  average  daily  circulation  of  the  114  news- 
papers printed  in  English  showed  the  greatest  increases  during  the 
6-month  periods  from  April  to  October  of  each  year.  The  changes 
in  circulation  of  these  papers  from  October  1  to  April  1  were  not  im- 
portant. The  greatest  increase,  which  occurred  in  1914,  amounted 
to  7.7  per  cent,  as  compared  with  3.6  per  cent  in  1915  and  4.3  per 
cent  in  1916. 

The  average  daily  circulation  of  the  10  newspapers  printed  in  for- 
eign languages  showed  remarkable  increases  during  each  6-months' 
period  until  April  1,  1915.  During  the  two  following  periods  there 
was  a  falling  off  of  3.1  per  cent,  while  in  the  last  period  there  was  a 
gain  of  1.7  per  cent. 

The  increase  in  daily  circulation  of  the  124  daily  newspapers  in- 
cluded in  the  table  for  the  6-months'  period  ending  October  1,  1916, 
over  the  preceding  period  was  633,265  copies,  which  represents  an 
increase  in  consumption  of,  roughly,  20,000  tons  per  year  if  it  is 
assumed  that  the  average  size  of  these  papers  was  14  pages.  If  the 
average  size  was  16  pages,  the  increase  in  consumption  would  amount 
to  about  23,000  tons. 

In  addition  to  the  124  daily  newspapers  shown  in  the  table,  there 
are  about  2,300  other  daily  papers  whose  average  daily  circulation 
would  probably  be  about  7,000  copies.  No  attempt  has  been  made  to 
ascertain  what  the  increase  in  circulation  or  in  the  consumption  of 
news-print  paper  by  these  newspapers  has  been. 


A 


120 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


Table  31,  following,  classifies  the  114  daily  papers  printed  in  Eng- 
lish and  shows  the  increase  in  the  average  daily  circulation  of  each 
class  for  the  same  6-months'  periods: 

Table  31.— AVERAGE  DAILY  CIRCULATION  OF  114  NEWSPAPERS  PRINTED  IN  ENGLISH 

GROUPED  ACCORDING  TO  CIRCULATION,  1913-1916. 


Six-month 
period  endlng- 


6  newspapers 

400,000 

and  over. 


u 


Apr.  1,1913... 
Oct.  1,1913.... 
Apr.  1,1914... 
Oct.  1,1914.... 
Apr.  1,1916... 
Oct.  1,1916.... 
Apr.  1,1916... 
Oct.  1,1916.... 


2,445 
2,448 
2,502 
2,665 
2,660 
2,765 
2,794 
2,915 


IS. 


Perct. 


0.1 

2.3 

9.0 

8.8 

13.1 

14.8 

19.2 


5  newspapers 

300,000  to 

400,000. 


'4 


Jh 
o 


1,551 
1,579 
1,612 
1,704 
1,705 
1,793 
1,781 
1,888 


.3 
a 

0>  ^^ 


S.-r 


9  newspapers 

200,000  to 

300,000. 


g 


■3  f^ 


a 
o 


Perct 


1.8 

3.9 

9.9 

9.9 

15.6 

14.8 

2L7 


1,612 
1,622 
1,579 
1,842 
1,840 
1,926 
1,875 
1,980 


09  .So 

n 


P<rrt. 


9  newspapers 

150,000  to 

200,000. 


§ 

4-* 

g 

is 
u 


CO 


0.« 

>«.o 

14.3 
14.1 
19.5 
16.3 
22.8 


1,328 
1,335 
1,367 
1,432 
1,418 
1,493 
1,517 
1,571 


fe-d 
waeo 

Si  Po-I 


20  newsi>apers 

100,000  to 

150,000. 


9 
O 


Perct. 


0.5 

2.9 

7.8 

6.8 

12.4 

14.2 

18.3 


o 


1,841 
1,937 
1,970 
2,112 
2,093 
2,235 
2,234 
2,283 


5 


65  newspapers 
50,000  to 
100.000. 


Perct. 


5.2 
7.0 
14.7 
13.7 
2L4 
21.3 
24.0 


■d 
a  a 

o  a9 

.a 

u 

o 


I- 


fa 


3,822 
3,927 
3,930 
4,202 
4,163 
4,168 
4.172 
4,353 


a>  ki  t-i 


Perct. 


2.7 
2.8 
9.9 
8.9 
9.1 
9.2 
13.9 


1  Decrease. 

The  largest  increase  in  circulation  since  April  1,  1913,  amounting 
to  24  per  cent,  was  shown  by  the  papers  between  100,000  and  150,000 
copies  per  day.  Those  between  200,000  and  300,000  made  nearly  as 
great  an  increase,  however.  The  smallest  increase  was  made  by  the 
papers  between  50,000  and  100,000  copies. 

Increase  in  advertising. — The  volume  of  advertising  determines 
to  a  large  extent  the  size  of  newspapers  and  is  probably  the  most  im- 
portant factor  affecting  the  consumption  of  print  paper.  Statistics 
of  advertising  obtained  by  the  Commission  from  101  large  daily 
papers  show  the  following  increases  in  1916  over  1915 : 

Per  cent. 

January,  1916.  over  January,  1915 9.3 

March,  1916,  over  March,  1915 n.  1 

May,  1916,  over  May,  1915 12. 9 

Jnne,  1916,  over  June,  1915 14.8 

Published  statistics  of  advertising  for  the  principal  daily  papers 
in  New  York,  Philadelphia,  Boston,  and  Chicago  for  the  first  half  of 
1916  also  show  large  increases  over  the  first  half  and  second  half  of 
1915,  as  Table  32  following  indicates. 


SUPPLY  and  demand  FACTORS. 


121 


Table  32.— increase  IN  THE  COLUMNS  OF  ADVERTISING  OF  40  LARGE  DAILY   NEWS- 
PAPERS, FIRST  HALF  OF  1916  OVER  PRECEDING  HALF-YEAR  PERIODS.* 


City. 


New  York.. 

Boston. 

Chicago 

Philadelphia 

Total.. 


Number 
of  publi- 
cations. 


17 
9 

7 
7 


40 


Total 
number 
of  col- 
umns of 
adver- 
tising 
January 
to  June, 
1916. 


231,608 
72, 176 
95, 719 
94,508 


494,011 


Percentage  of  increase,  January  to  June, 
1916,  over- 


July  to 
Decem- 
ber, 1915. 


9.1 
19.9 
14.5 
24.4 


14.9 


January 

to  June, 

1915. 


7.9 
16.1 
12.4 
23.1 


12.6 


July  to 
Decem- 
ber, 1914. 


16.9 
27.0 
21.0 


January 

to  June, 

1914. 


1.0 

8.9 
13.0 


*  Compiled  from  statistics  furnished  by  one  newspaper  in  each  city,  except  Chicago,  for 
which  the  statistics  were  furnished  by  the  Washington  Press  Co. 

Seventeen  daily  papers  in  Greater  New  York  had  a  total  of 
231,608  columns  of  advertising  during  the  first  six  months  of  1916, 
which  was  9.1  per  cent  greater  than  for  the  preceding  six  months 
and  7.9  per  cent  greater  than  for  the  first  half  of  1915.  Nine  Boston 
papers  show  an  increase  in  the  number  of  columns  of  advertising  of 
19.9  per  cent  over  the  second  half  of  1915  and  16.1  per  cent  over  the 
first  half.  Seven  Chicago  papers  show  an  increase  of  14.5  per  cent 
over  the  second  half  of  1915  and  12.4  per  cent  over  the  first  half. 
Seven  Philadelphia  papers  show  an  increase  of  24.4  per  cent  over 
the  second  half  of  1915  and  23.1  per  cent  over  the  first  half.  The 
40  daily  papers  having  an  aggregate  of  494,000  columns  of  advertis- 
ing during  the  first  six  months  of  1916  show  an  increase  of  14.9  per 
cent  over  the  preceding  six  months  and  12.6  per  cent  over  the  first 
half  of  1915. 

The  increase  in  the  volume  of  advertising  in  1916  shown  by  the 
preceding  tables  necessitated  a  considerable  although  not  corre- 
sponding increase  in  the  size  of  papers  and  in  the  consumption  of 
news-print  paper.  The  increase  in  the  price  of  paper  and  the 
campaigns  for  curtailing  consumption  led  to  the  introduction  of 
economies  and  changes  which  partially  oflfset  the  demand  for  addi- 
tional advertising  space.  In  some  cases  the  proportion  of  reading 
matter  to  advertising  was  considerably  reduced. 

Efeect  of  panic  conditions. — Various  factors  contributed  to  the 
creation  of  a  panic  among  publishers  in  1916,  which  caused  a  bidding 
up  of  prices  and  gave  the  appearance  of  a  much  greater  demand 
and  consequent  shortage  than  actually  existed.  Trade  reports  were 
replete  with  stories  of  rapidly  increasing  costs  and  declining  stocks. 
Publishers  who  "went  shopping"  among  manufacturers  and  jobbers 
were  generally  told  that  the  latter  had  no  paper  to  offer.     This 


w 


j 


! 


I 


Iv 


II 


■•  i-i*!)Tilji-f*«-'5^VT^  "^ 


^^'i^r^'Tt'-'^^  ?»iT->  4f>'y-fTrsj^T'^^^ff^M^ 


Smm 


122 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


threw  them  back  upon  the  manufacturer  or  jobber  who  had  origi- 
nally supplied  them,  who  was  in  a  position  to  charge  almost  any 
price  he  saw  fit.  In  some  cases  the  publisher  could  no  longer  obtain 
paper  from  the  original  source  of  supply  be^cause  the  mill  had  been 
sold  or  the  machines  had  been  changed  to  other  grades  of  paper. 
They  were  thus  compelled  to  canvass  every  known  source  of  supply 
until  paper  could  be  found. 

When  contracts  expired  the  mills  in  some  cases  would  not  renew 
them.  In  other  cases,  when  contracts  were  renewed,  the  tonnage 
allotted  was  reduced  below  the  actual  requirements  of  the  news- 
papers, so  that  they  were  forced  to  seek  additional  supplies  in  the 
open  market. 

A  single  publisher  in  quest  of  paper  sometimes  canvassed  every 
manufacturer  within  reach  and  also  various  jobbers  and  selling  agents, 
who  in  turn  canvassed  the  mills  from  which  they  received  their  sup- 
plies, causing  a  piling  up  of  inquiries  for  paper  which  gave  the  ap- 
pearance of  a  greater  demand  than  really  existed. 

In  some  cases  publishers  bought  more  paper  than  they  actually 
needed  and  stored  it  as  a  protection  against  future  shortage  and  high 
prices.     The  quantity  thus  stored,  however,  was  probably  not  large. 

Section  3.  Causes  of  foreign  demand. 

The  keen  foreign  demand  for  news-print  paper  in  the  United  States 
and  Canadian  markets  has  been  due  to  changed  conditions  abroad  re- 
sulting from  the  European  war.  Before  the  war  Germany,  Norway, 
and  Sweden  were  exporters  of  paper  and  paper  materials.  Austria 
also  exported  some  news  print,  and  Finland  supplied  Russia.  Eng- 
land and  France  imported  pulp  and  made  most  of  their  own  paper. 
The  United  States  imported  considerable  quantities  of  chemical  pulp 
from  Scandinavian  countries  as  well  as  a  few  tons  of  news  print.  The 
European  war  completely  changed  these  conditions.  Germany  be- 
came an  importer  of  the  bulk  of  Swedish  pulp  instead  of  an  exporter 
of  pulp  and  paper.  The  supply  of  Russian  pulp  wood  which  Norway 
uses  in  large  quantities  was  cut  off.  Necessities  of  war  compelled 
Great  Britain  to  requisition  much  merchant  tonnage,  and  conse- 
quently shipments  of  coal  to  Sweden  were  restricted.  Thereupon,  in 
January,  1916,  Sweden  retaliated  by  declaring  a  virtual  embargo  upon 
the  exportation  of  chemical  pulp  to  Great  Britain.  Since  Sweden  fur- 
nished about  two-thirds  of  the  consumption  of  pulp  in  England, 
amounting  to  461,219  short  tons,  a  severe  shortage  occurred  in  that 
country.  To  make  up  this  deficiency  English  consumers  turned  to  the 
Norwegian  product,  which  soon  sold  at  a  premium.  English  paper 
makers  also  became  active  buyers  of  paper  and  pulp  in  Canada 
and  the  United  States.  A  similar  situation  developed  in  France  and 
other  European  countries,  resulting  in  shipments  from  the  United 
States  to  countries  which  normally  never  bought  in  our  market. 


SUPPLY  AND  DEMAND  FACTORS. 


123 


It  is  reported  that  during  the  year  1916  French  buyers  tried  to  pur- 
chase 60,000  tons  of  news  print  in  the  United  States  and  Canadian 
markets,  offering  attractive  prices,  but  were  unsuccessful.  Since  the 
outbreak  of  the  European  war  Australia  and  South  America  have 
also  been  largely  dependent  upon  American  and  Canadian  sources  for 
their  paper  supply. 

The  foreign  demand  for  news-print  paper  resulted  in  a  large  in- 
crease in  exports  during  the  year  1916,  as  shown  by  Table  29  above. 
The  total  exports,  however,  only  amounted  to  5.6  per  cent  of  the 
domestic  production,  as  compared  with  4.5  per  cent  for  the  previous 
j'ear.  Canadian  export  statistics  show  that  the  quantity  of  print 
paper  exported  to  other  countries  than  the  United  States  was  no 
greater  for  the  first  seven  months  of  1916  than  for  the  corresponding 
months  of  1915.  There  was  a  large  increase  in  the  quantity  of  chem- 
ical pulp,  or  sulphite,  exported  to  Great  Britain,  however. 

That  no  greater  quantity  of  paper  w^as  exported  from  the  North 
American  Continent  was  due  to  the  fact  that  the  output  of  both 
Canadian  and  United  States  mills  was  largely  contracted  for  with 
publishers  in  the  United  States,  and  also  to  the  fact  that  shipping 
facilities  were  lacking  and  ocean  rates  and  insurance  extremely  high. 
Both  France  and  England  are  reported  to  have  restricted  the  quan- 
tity of  paper  imported. 

The  quantity  of  news-print  paper  exported  from  the  United  States 
and  Canada  in  excess  of  that  required  to  supply  regular  contract 
customers  abroad  reduced  the  supply  available  for  the  open  market, 
and  to  that  extent  was  a  factor  in  the  sharp  rise  in  open-market 
prices.  The  attractive  prices  offered  by  foreign  buyers,  even  if  they 
did  not  secure  paper,  also  had  an  important  effect  upon  domestic 
prices.  When  contracts  with  domestic  publishers  expired  American 
manufacturers  had  the  choice  of  renewing  them  or  of  selling  the 
released  tonnage  to  foreign  buyers.  The  foreign  bids,  therefore, 
proved  very  effective  as  a  leverage  in  securing  an  increase  in  domestic 
prices.  Foreign  buyers,  just  as  did  domestic  buyers,  sought  paper 
from  all  possible  sources  of  supply,  which  resulted  in  an  accumula- 
tion of  foreign  inquiries  at  the  mills  and  made  the  quantity  demanded 
seem  much  greater  than  it  really  was. 

Section  4.  Causes  of  limited  supply. 

It  has  already  been  pointed  out  that  the  production  of  news-print 
paper  in  1916  did  not  increase  as  rapidly  as  the  indicated  consump- 
tion, while  a  considerable  domestic  as  well  as  export  demand  re- 
mained unsatisfied.  In  spite  of  the  attractive  prices  offered,  the 
supply  was  not  sufficient  to  meet  the  demand.  The  principal  reason 
for  this  condition  was  the  inadequacy  of  the  existing  mill  equipment 
and  the  impossibility  of  installing  new  equipment  immediately. 


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124 


BEPOBT   ON    NEWS-PRINT  PAPER   INDUSTRY. 


The  information  collected  by  the  Commission  indicates  that  almost 
every  available  machine  in  the  United  States  and  Canada  ran  24 
hours  a  day  for  six  days  a  week  throughout  the  year  1916.  Strikes, 
breakdowns,  fires,  and  floods  diminished  the  possible  output  some- 
what, but  probably  to  a  less  extent  in  1916  than  in  1915.  Manufac- 
turers state  that  their  mills  were  speeded  up  to  the  limit  of  their 
capacity.  During  the  spring  months  of  1916,  on  account  of  favor- 
able water  conditions,  a  number  of  domestic  mills  ran  even  above 
their  normal  rated  capacity,  which  is  estimated  to  be  about  93  per 
cent  of  the  maximum  capacity.  In  June,  1916,  the  average  output  of 
all  domestic  mills  belonging  to  the  News  Print  Manufacturers'  Asso- 
ciation was  reported  as  94.3  per  cent  of  their  theoretical  maximum 
capacity.  In  the  same  month  Canadian  mills  attained  an  average 
of  97.7  per  cent  of  their  maximum  capacity.  It  thus  appears  that  the 
manufacturers,  both  domestic  and  Canadian,  strove  to  meet  the  in- 
creasing demand  and  produced  as  much  paper  as  their  news-print 
equipment  would  permit.  A  further  increase  in  output  therefore 
could  only  have  been  obtained  by  building  new  mills,  adding  new 
machines  to  existing  mills,  transferring  machines  from  other  grades 
to  news  print,  or  running  one  or  more  shifts  on  Sunday. 

According  to  information  obtained  by  the  Commission,  it  takes  at 
least  a  year  to  build  and  install  a  Fourdrinier  paper  machine  and  to 
develop  the  water  power  and  install  the  complementary  equipment 
for  making  pulp  and  preparing  it  in  the  beater  room.  Paper  ma- 
chine manufacturers  have  stated  that  in  1916  it  took  considerably 
longer  than  formerly  to  construct  a  modern  Fourdrinier  machine,  on 
account  of  the  large  amount  of  business  on  hand.  The  cost  was  also 
greater.  It  was,  therefore,  impossible  to  build  new  mills  or  install 
new  machines  during  the  year  to  meet  the  sudden  increase  in  demand 
for  paper.  The  three  new  machines  that  did  begin  operations  in 
1916  were  in  the  process  of  construction  when  the  unusual  demand 
arose.  Two  of  these  belong  to  the  International  Paper  Co.  and  one 
to  a  Canadian  company,  the  Donnacona  Paper  Co. 

Two  new  mills  and  several  new  machines  which  were  also  in  the 
process  of  construction  in  1916  will  begin  operation  in  the  first  half 
of  1917.  The  present  high  prices  and  large  profits  are  also  leading 
to  further  developments  in  the  industry  not  previously  contemplated. 
These  will  not  be  available,  however,  until  1918.     (See  Ch.  II,  p.  25.) 

The  transfer  of  machines  from  other  grades  to  news-print  paper  to 
a  sufficient  extent  to  meet  the  increased  demand  was  prevented  by  the 
increase  in  the  prices  of  other  grades  of  paper  and  the  higher  profits 
generally  obtained  from  their  manufacture  and  sale.  When  this 
matter  of  transferring  machines  was  taken  up  with  the  executive 
committee  of  the  News  Print  Manufacturers  Association  by  the 
Commission  the  members  stated  that  such  a  transfer  would  result  in  a 
sacrifice  in  profits  which  they  could  not  afford  to  make. 


SUPPLY  AND  DEMAND  FACTORS. 


125 


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News-print  p^per  manufacturers  also  stated  that  Sunday  operation 
was  not  possible  because  of  the  opposition  of  the  labor  unions  and 
also  because  of  the  necessity  of  making  repairs.  One  small  mill  in 
Wisconsin,  however,  did  succeed  in  operating  on  Sunday  for  several 
months. 

As  heretofore  pointed  out,  the  domestic  news  print  industry  has 
not  grown  since  1910,  and  the  increased  consumption  of  domestic 
publishers  has  been  supplied  more  and  more  by  Canadian  mills.  As 
a  result  there  was  not  enough  surplus  mill  capacity  in  1916  to  meet 
the  expansion  in  demand  which  occurred.  The  lack  of  development 
shown  by  the  domestic  industry  is  due  to  a  considerable  extent  to 
the  higher  cost  of  manufacture  and  lower  profits  of  most  mills  as 
compared  with  Canadian  mills.  The  spruce  pulp  wood  most  acces- 
sible to  domestic  mills  in  many  cases  has  already  been  used  up  and 
present  requirements  must  be  met  by  supplies  brought  from  longer 
distances.  Some  companies  are  paying  freight  as  high  as  $4  a  cord, 
which  increases  the  cost  of  the  wood  at  the  mill  fully  a  third.  In 
Canada  water  power  is  cheaper  than  in  the  United  States  and  timber- 
lands  can  be  obtained  on  more  favorable  terms,  so  that  the  trend  of 
the  industry  is  inevitably  in  that  direction. 

Section  5.  Prospective  supply  and  demand  for  1917. 

The  relation  between  supply  and  demand  for  1917  can  only  be 
estimated.  Figures  furnished  the  Commission  by  news  print  manu- 
facturers indicate  that  the  output  of  mills  on  the  North  American 
Continent  will  be  approximately  as  great  for  1917  as  for  the  preced- 
ing year,  since  new  machines  coming  in  will  probably  offset  the 
tonnage  lost  by  the  transfer  of  machines  from  news  print  to  other 
grades  as  well  as  by  any  disturbances  that  may  occur  in  production. 
It  is  reasonable  to  assume  also  that  the  relation  of  imports,  exports, 
and  stocks  on  hand  to  the  total  will  remain  approximately  the  same 
in  1917  as  in  the  preceding  year,  so  that  the  quantity  of  paper  avail- 
able for  consumption  should  be  as  great.  This  quantity  amounted  to 
1,816,010  tons  in  1916. 

In  December,  1916,  the  various  newspaper  associations  were  re- 
quested by  the  Commission  to  furnish  estimates  of  the  minimum 
requirements  of  their  members  for  1917  and  the  extent  to  which  their 
requirements  were  assured.  The  data  supplied  by  publishers'  asso- 
ciations and  individual  publishers,  taken  in  connection  with  the  data 
furnished  by  manufacturers,  indicated  that  the  minimum  require- 
ments of  the  papers  reporting  for  1917  were  assured  except  about 
130,000  tons.  These  estimates  did  not  include  the  requirements  of  a 
large  number  of  small  papers  that  did  not  belong  to  associations  and 
did  not  report  to  the  Commission,  but  the  aggregate  quantity  of 
paper  used  by  such  publishers  is  small. 


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126 


REPORT  ON    NEWS-PRINT  PAPER  INDUSTRY. 


The  reports  of  news  print  manufacturers  in  the  United  States 
made  at  the  same  time  indicated  that  after  fulfilling  their  contracts 
and  after  taking  care  of  those  customers  that  they  felt  under  moral 
obligations  to  supply  with  paper  during  the  first  half  of  1917,  they 
would  have  left  about  50,000  tons  of  free  paper,  if  their  machines 
continued  to  produce  at  the  same  rate  as  in  1916.    In  addition  to  this 
quantity  there  was  some  free  paper  available  from  Canadian  mills. 
On  this  basis  there  would  have  been  at  least  100,000  tons  of  free  paper 
available  for  the  whole  year.    But  subsequent  information  indicates 
that  because  of  car  shortage  and  other  abnormal  conditions  the  news- 
print mills  will  not  be  able  to  equal  their  1916  record,  so  that  the  sur- 
plus of  free  paper  will  probably  be  somewhat  less  than  100,000  tons. 
The  contract  and  moral  obligations  reported  by  domestic  manu- 
facturers, however,  included  a  considerable  quantity  of  paper  that 
was  to  be  supplied  to  jobbers,  and  it  is  safe  to  assume  that  a  consid- 
erable portion  of  this  is  free  tonnage  and  would  be  available  to  those 
publishers  who  are  dependent  upon  the  open  market.     These  facts 
with  respect  to  the  commitments  and  free  tonnage  of  manufacturers 
and  the  requirements  of  publishers  support  the  conclusion  that  the 
supply  during  1917  will  probably  be  sufficient  to  meet  the  minimum 
requirements  of  consumers,  if  they  economize  in  every  way  possible. 
The  balance  between  consumption  and  production,  however,  is  very 
close,    and    present    abnormal    conditions    are    constantly    putting 
added  pressure  upon  publishers  to  increase  their  circulation,  so  that 
there  is  little  prospect  of  a  substantial  improvement  in  market  condi- 
tions during  the  continuance  of  the  war. 

Section  6.  Conclusions. 

The  facts  stated  on  the  preceding  pages  indicate  that  there  was  a 
scarcity  of  news  print  paper  in  1916.  A  small  increase  in  domestic 
production  is  shown;  but  there  was  a  large  increase  in  demand,  both 
domestic  and  foreign,  and  imports  were  not  sufficient  to  meet  this 
increase.    As  a  result  stocks  were  materially  reduced. 

This  scarcity,  however,  was  undoubtedly  exaggerated  by  articles 
published  in  trade  papers  and  by  the  emphasis  given  it  by  the  manu- 
facturers through  their  association  and  by  the  jobbers.  This  resulted 
in  an  abnormal  multiplication  of  orders  caused  by  panic  conditions 
thus  partly  brought  about.  The  result  was  a  bidding  up  of  prices, 
giving  the  appearance  of  a  much  greater  demand  than  actually 
existed. 

All  the  data  in  the  Commission's  possession  indicate  that  there  will 
probably  be  enough  paper  to  meet  the  minimum  needs  during  1917, 
if  publishers  will  practice  economy  in  every  way  possible.  The 
effect  of  the  war  conditions  now  existing  will  probably  be  to  stim- 
ulate demand  and  reduce  the  supply. 


CHAPTEE  VII. 

EVIDENCE  OF  VIOLATIONS  OF  THE  ANTITRUST  LAWS. 

Section  1.  The  News-Print  Manufacturers  Association. 

Substantial  evidence  is  in  the  possession  of  the  Commission  tending 
to  show  violations  of  the  Federal  antitrust  laws  by  certain  manufac- 
turers of  news-print  paper  who  are  members  of  the  voluntary  asso- 
ciation known  as  the  News  Print  Manufacturers  Association,  with 
headquarters  at  18  East  Forty-first  Street,  New  York  City.  Its 
membership  includes  practically  all  of  the  Canadian  manufacturers 
as  well  as  all  the  United  States  producers  except  one  large  and  a  few 
smaller  ones.  About  86  per  cent  of  the  effective  production^  of 
news-print  paper  of  the  North  American  Continent  is  included  in 
the  association.  The  five  members  of  the  executive  committee  of 
the  association,  who,  with  the  secretary,  manage  its  affairs,  speak 
directly  for  more  than  one-third  of  the  total  news-print  tonnage 
of  the  continent.  Mr.  George  F.  Steele,  of  New  York,  the  secretary 
of  the  association,  is  its  admitted  active  central  agent.^ 

The  organization  has  no  articles  of  association  and  no  by-laws. 
Its  expenses  are  defrayed  by  assessments  of  members  on  the  basis 
of  tonnage  output.  Neither  it  nor  its  executive  committee  keeps  any 
written  minutes  or  records.  Meetings  of  the  executive  committee 
and  of  the  association  are  held  at  the  call  of  the  secretary,  and 
usually  in  turn  at  New  York,  Montreal,  and  Chicago.  Policies  are 
decided  upon  at  the  various  meetings  or  through  correspondence 
!  etween  the  secretary  and  different  members.  As  a  rule  they  are  put 
into  effect  on  notification  by  the  secretary.  The  secretary,  by  fre- 
quent use  of  the  telephone,  also  keeps  in  close  touch  with  each  of 
the  members  of  the  executive  committee,  as  well  as  with  certain 
distributing  agencies  and  other  persons  prominent  in  the  industry. 

Ostensibly  the  association  is  organized  for  the  collection  and  dis- 
semination of  statistics.  Actually,  however,  its  principal  energies 
have  been  diverted  to  other  activities.  The  evidence  in  the  hands 
of  the  Commission  (consisting  largely  of  correspondence  between 
the  active  parties  and  of  interviews)  tends  to  show  that  the  acts 

1  Effective  production  refers  to  that  part  of  news-print  paper  in  the  market  for  pub- 
lishers. It  does  not  include  some  news  print  controlled  by  publishers  and  some  which 
is  used  in  the  production  of  wall  paper.  In  1916,  82  per  cent  of  the  total  production  on 
the  North  American  Continent  was  produced  by  members  of  the  association. 

'  For  further  details  in  regard  to  the  association,  see  Chap.  II,  sec.  5. 

127 


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128 


EEPOBT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


of  the  association  officers  and  members  have  transcended  innocent 
purposes  and  resulted  in  substantial  suppression  of  competition  and 
restraint  of  trade. 

Section  2.  Allotment  of  customers. 

Competition  in  the  selling  of  news-print  paper  in  both  the  United 
States  and  Canada  has  been  prevented  by  the  allotment  of  custom- 
ers or  by  the  noninterference  by  association  members  with  the 
customers  of  any  other  member. 

These  efforts  to  control  constitute  one  factor  in  the  present  situa- 
tion. Writing  to  a  manufacturer  under  date  of  March  17,  1916, 
the  secretary  of  the  association  says  (after  referring  to  the  dis- 
parity of  costs  between  what  he  calls  the  larger  and  smaller  mills, 
which  latter  are  compelled  to  purchase  their  sulphite) : 

If  the  prices  were  put  up  to  a  point  sufficient  to  protect  them, 
the  profits  made  by  these  larger  concerns  would  be  simply 
astounding.  On  the  other  hand,  what  are  the  smaller  mills 
going  to  do  if  the  price  of  paper  does  not  go  up  ? 

There  seems  to  be  only  one  way  out  of  the  difficulty  for  them, 
and  that  is  for  the  larger  mills  to  take  the  contracts  and  those 
smaller  mills  to  depend  on  current  business  until  the  war  is 
over  and  then  bring  about  a  readjustment  of  contracts.  There 
is  good  reason  why  this  current  business  should  pay  a  high 
price,  and  it  seems  to  me  that  it  should  be  turned  over  to  the 
mills  who  do  not  supply  their  own  raw  material  and  will  have 
to  pay  well  for  their  chemical  pulp. 

*  *  *  *  4t  *  « 

This  is  a  matter  which  will  be  discussed  fully  at  the  meeting 
next  Thursday  and  Friday  in  Montreal,  and  I  am  going  to  try 
to  bring  about  an  arrangement  of  that  sort  for  the  production 
of  the  smaller  concerns. 

It  was  elicited  at  the  recent  hearings  before  the  Commission  that 
such  allotment  of  customers  and  business  exists  in  the  present 
organization  of  the  trade. 

As  a  result,  and  as  the  evidence  shows,  except  where  news-print 
mills  have  ceased  to  make  news-print  paper  and  have  thus  left  their 
customers  in  the  open  market,  or  where  occasionally  a  mill  not  in 
the  association  has  made  a  lower  price  to  obtain  a  needed  customer — 
there  have  been  very  few  instances  of  competition  in  selling  in  the 
news-print  paper  industry.  In  fact,  so  few  are  these  cases  that  each 
is  known  and  referred  to  by  name  in  the  trade.  Such  instances  of 
competition  of  any  size  as  did  occur  were  either  arbitrated  or  apolo- 
gized for  and  promises  of  nonrepetition  demanded  and  made. 

The  effect  of  these  practices  appears  to  be  the  undue  enhance- 
ment of  prices  to  small  publishers  and  a  widening  of  the  disparity 
in  prices  charged  the  customers  of  different  mills. 


EVIDENCE  OF  VIOLATIONS  OF  THE  ANTITRUST  LAWS.  129 

Section  3.  Prorating  and  absorbing  tonnage  of  new  mills. 

By  the  surrender  pro  rata  of  customers  to  absorb  the  tonnage  of 
new  mills  as  it  comes  on  the  market,  such  new  competitors  have  been 
prevented  from  selling  any  paper  in  open  competition. 

The  power  of  the  association  entirely  to  suppress  the  threatened 
competition  of  new  mills  has  been  exercised  in  at  least  three  instances. 
The  Price  Bros.'  mill  and  the  Abitibi  mill,  of  Canada,  are  both  large, 
new,  and  efficient  mills  and  therefore  potentially  powerful  com- 
petitors. The  customers  required  by  them,  in  order  to  keep  their 
production  off  the  competitive  market,  were  surrendered  to  them  pro 
rata  by  members  of  the  association,  so  that  substantially  no  tonnage 
therefrom  came  into  the  market  as  competitive.  Successful  efforts 
were  made  to  prevent  competition  from  the  tonnage  of  the  Union 
Bag  &  Paper  Co.'s  new  news  print  mill  at  Three  Rivers,  Quebec.  Its 
tonnage  is  to  be  sold  through  the  Canadian  Export  Paper  Co.  (See 
p.  42.) 

It  is  apparent  that  there  is  no  necessity  for  any  price  agreement 
under  any  scheme  of  allotment  either  of  customers  or  of  territory 
among  the  various  producing  units  when  such  division  of  business  is 
respected.  Each  producer  is  then  at  liberty  to  charge  his  customers 
whatever  the  traffic  will  bear  without  the  restraining  influence  of 
competition.  Particularly  are  such  schemes  effective  when,  as  in 
the  present  situation,  all  over-seas  importation  of  paper  is  cut  off. 

Section  4.  Curtailment  of  production. 

In  1915  the  association  attempted  the  curtailment  of  the  produc- 
tion of  those  engaged  in  the  manufacture  of  news-print  paper.  It 
has  also  endeavored  to  prevent  existing  producers  from  increasing 
their  facilities  for  production. 

On  the  latter  point,  although  the  secretary,  at  a  meeting  in  Mon- 
treal in  October,  1915,  stated  that — 

We  were  on  the  verge  of  a  revival  of  business  such  as  has 
rarely  before  been  experienced  in  this  country. 

and  that — 

I  stated  to  those  who  were  assembled  at  the  Montreal  meeting 
that  it  appeared  to  me  as  if  prosperity  was  knocking  at  our 
door, 

vet,  notwithstanding  such  knowledge  or  prediction,  efforts  were  con- 
tinued throughout  that  month  to  prevent  one  company  from  putting 
in  a  new  machine  for  the  manufacture  of  news  print,  even  to  the 
extent  of  attempting  to  buy  certain  water  power,  "  so  as  to  stall  his 
plans  of  putting  a  paper  mill  in  there  " — this  is  the  language  of  the 
person  who  made  the  attempt. 

88509°— 17 9 


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130 


REPORT   ON    NEWS-PRINT  PAPER   INDUSTRY. 


Section  5.  Canadian  joint  selling  agency. 

On  August  15, 1916,  a  charter  was  granted  to  the  Canadian  Export 
Paper  Co.,  of  Montreal,  with  an  authorized  capital  stock  of  $500,000. 
The  form  of  contract  for  subscription  to  stock  in  that  company  shows 
that  each  paper-manufacturing  company,  by  subscribing  thereto, 
agrees  to  place  in  the  hands  of  the  Canadian  Export  Paper  Co.  the 
sale  of  all  of  its  news-print  paper  tonnage  (except  that  sold  in  Can- 
ada) and  that  the  proceeds  of  such  sales  should  be  prorated  among 
the  constituent  concerns. 

Five  Canadian  concerns — The  Laurentide  Co.,  Price  Bros.,  Belgo- 
Canadian,  Donnacona,  and  Brompton  Pulp  &  Paper  Co. — are 
members  of  this  export  company.  It  is  expected  that  other  Canadian 
mills  will  become  members  or  put  their  tonnage  at  its  disposal,  and 
the  export  company  will  sell  "  as  though  it  were  the  product  of  one 
concern "  the  total  export  tonnage  of  its  constituent  members  or 
principals,  all  of  whom  are  normal  competitors,  and  whose  aggre- 
gate output  comprises  more  than  one-third  of  all  the  news-print 
paper  produced  in  Canada.  In  1915  about  75  per  cent  and  in  1916 
about  77  per  cent  of  the  total  Canadian  output  was  imported  into 
the  United  States.     (See  Chap.  II,  sec.  7.) 

The  sales  agents  of  the  Export  Paper  Co.  have  already  been  active 
in  the  United  States.  Through  this  joint  agency  that  competition, 
if  any,  which  previously  may  have  existed  or  which  might  now 
normally  exist  between  the  member  concerns  in  bidding  for  trade 
in  the  United  States  has  been  entirely  suppressed. 

It  should  be  stated  in  this  connection  that  the  correspondence 
shows  that  the  secretary  of  the  association  urged  the  formation  of 
this  company  and  that  the  constituent  companies  are  also  members 
of  the  News  Print  Manufacturers  Association,  and  that  the  Lauren- 
tide  company  is  represented  on  the  executive  committee  of  the  asso- 
ciation. The  possible  results  of  the  control  of  one-third  of  the  total 
Canadian  tonnage  through  the  executive  committee  of  the  News 
Print  Manufacturers  Association  in  diverting  such  supplies  from 
the  United  States  and  artificially  starving  the  domestic  market  can 
easily  be  appreciated. 

Section  6.  Other  activities. 

Substantial  evidence  of  other  activities  tending  to  restraint  of 
trade  or  in  aid  or  furtherance  of  such  restraint  is  also  in  the  hands 
of  the  Commission.    This  evidence  may  be  summarized  as  follows: 

(a)  Two  campaigns  among  the  news-print  manufacturers  were 
prosecuted  through  the  secretary  of  the  News  Print  Manufacturers 
Association,  urging  that  such  manufacturers  take  steps  to  show  gen- 
eral and  large  increases  in  costs  as  a  justification  for  proposed  sharp 


EVIDENCE  OF  VIOLATIONS  OF  THE  ANTITRUST  LAWS.  131 

advance  in  prices.  The  first  campaign,  in  the  winter  of  1915-16, 
apparently  failed  to  make  the  desired  showing.  A  number  of  mills 
answered  that  there  had  been  no  particular  increase  in  costs  or  that 
if  slight  increases  had  occurred  they  had  been  offset  by  certain  sav- 
ings. The  second  campaign  occurred  in  May  and  June,  1916.  It 
was  then  emphatically  impressed  upon  the  mills  that  in  their  cost 
statements  all  materials  used  should,  regardless  of  actual  costs,  be 
figured  as  though  bought  in  the  current  open  market,  when  such 
was  not  the  case. 

(b)  Substantially  all  paper  sold  to  publishers  is  sold  on  the  con- 
dition that  it  be  used  only  by  the  purchaser.  This  practice  results 
in  closer  control  of  the  supply  of  paper  and  prevents  any  accumula- 
tion of  stocks  which  might  be  offered  in  competition  with  the  supply 
from  the  mills. 

(c)  Some  mills,  which  buy  pulp  wood,  have  made  and  generally 
respect  a  division  of  territory  and  do  not  bid  against  each  other  in 
the  purchase  of  such  wood. 

(d)  The  business  of  most  of  the  smaller  publishers  is  now  divided 
among  jobbers  and  distributing  agencies.  Indications  are  that  in 
certain  States  or  sections  the  smaller  publishers  are  unable  to  obtain 
quotations  except  from  the  specific  jobbers  to  whom  their  district  is 
apparently  assigned.  The  fact  that,  as  a  rule,  mills  will  not  quote  to 
these  smaller  publishers  also  indicates  close  relationship  between 
mills  and  distributing  agencies  in  such  division  of  territory. 


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FACTS  WITH  CONCLUSIONS  AND  BECOMMENDATIONS. 


133 


CHAPTER  VIII. 

SUMMARY  OF  PRINCIPAL  FACTS  WITH  CONCLXTSIONS  AND  RECOM- 
MENDATIONS. 

Section  1.  Principal  facts. 

News-print  paper  is  produced  in  North  America  by  approxi- 
mately 80  manufacturing  plants,  of  which,  in  1916,  63  were  located 
in  the  United  States  and  17  in  Canada.  Approximately  76  per  cent 
of  the  Canadian  production  is  consumed  in  the  United  States. 

The  costs  of  producing  news- print  paper  depend  upon  varying 
factors,  to  wit,  the  size  and  integration  of  the  plant,  its  access  to 
supplies  of  wood,  the  character  and  cost  of  its  water  power,  and  the 
efficiency  of  equipment  and  management.  The  large  mills,  which 
generally  are  the  most  efficient,  usually  make  contracts  for  their 
entire  output  for  a  year  in  advance  with  the  large  metropolitan 
papers  for  the  bulk  of  their  tonnage.  Some  large  contracts  have 
been  made  for  periods  of  from  three  to  five  years.  The  smaller  mills, 
and  those  which  are  operating  at  higher  costs,  usually  supply  the 
smaller  publishers  and  sell  a  larger  proportion  of  their  output  in  the 
open  market,  through  jobbers,  at  higher  prices. 

Costs  of  production. — For  the  first  six  months  of  the  year  1916 
average  costs  had  not  increased  over  the  last  half  of  the  year  pre- 
ceding. For  the  next  four  months,  up  to  October  1,  1916,  the  aver- 
age increase  of  costs  in  the  chief  American  mills  was  about  $1.50 
per  ton.  By  December  of  1916  and  January  of  1917  average  costs 
in  these  mills  had  increased  $5.52  per  ton  over  the  costs  of  the  first 
six  months  of  1916,  the  increase  in  particular  mills  ranging  from  $1 
to  $19  per  ton.  It  has  been  estimated  that  the  average  advance  for 
the  first  half  of  1917  would  be  between  $5  and  $10  per  ton.  Informal 
estimates  made  by  the  officials  of  the  Canadian  Government  placed 
the  maximum  increase  in  cost  of  production  at  $10  per  ton  for  Ca- 
nadian mills,  and  prices  were  agreed  upon  with  the  Canadian  Gov- 
ernment by  which  publishers  were  furnished  with  news-print  paper 
at  the  following  prices:  $2.50  per  100  pounds  for  rolls  and  $3.25  for 
sheets  in  car  lots  and  $3.50  per  100  pounds  for  sheets  in  less-than-car 
lots.     These  prices  are  subject  to  revision  after  June  1,  1917. 

Present  conditions  serious.— Conditions  in  the  newspaper  pub- 
lishing business  were  reported  by  the  Commission  in  March  as  serious 
132 


and  they  continue  to  be  serious.  Within  the  year  prices  to  large  con- 
sumers of  print  paper  have  been  advanced  from  about  $40  per  ton 
to  over  $60  and  $70  per  ton,  and  in  some  cases  even  up  to  $90  per  ton. 
Also,  by  concerted  action  the  terms  of  contracts  have  been  so  changed 
as  to  shift  a  considerable  financial  burden  from  the  manufacturers 
to  the  publishers.  To  some  of  the  larger  newspapers  of  the  country 
this  price  increase  means,  in  some  instances,  an  increase  in  paper  cost 
of  hundreds  of  thousands  of  dollars.  This,  in  many  cases,  will  not 
only  cause  the  loss  of  profits  for  the  year,  but  a  serious  financial  em- 
barrassment of  the  publication  itself. 

The  smaller  publishers  have  been  forced  to  pay  prices  as  high  as 
$150  and  $180  per  ton.  In  addition  to  the  above  increase  of  prices 
among  publishers  of  minor  dailies  and  weeklies,  it  is  complained  that 
they  found  great  difficulty  in  getting  paper  at  any  price,  and  to  a 
large  number  of  such  publishers  in  the  country  the  increase  in  the 
price  means  the  difference  between  a  living  margin  and  the  complete 
ruin  of  their  business  and  the  suspension  of  their  publications. 

The  financial  strength  of  great  daily  publications  may  enable  them 
to  survive ;  it  is  the  smaller  newspapers  that  will  probably  suffer  the 
most  seriously  if  these  conditions  continue.  The  small  weekly  and 
daily  publications  of  the  country  particularly  serve  a  great  and 
useful  purpose  in  the  dissemination  of  facts  and  in  the  creation  of 
an  intelligent  public  opinion,  and  such  disaster  as  impends  by  reason 
of  this  increase  in  the  price  of  news-print  paper  makes  the  question 
one  of  great  public  concern. 

Causes  or  existing  conditions. — The  existing  situation  is  partly 
due  to  conditions  of  supply  and  demand.  On  account  of  the  increase 
in  advertising  and  news  matter,  there  has  been  an  increase  in  the 
demand  for  news-print  paper.  The  supply  of  news-print  paper 
available  for  domestic  consumption  increased  from  1,644,000  tons  in 

1915  to  1,816,000  tons  in  1916,  an  increase  of  172,000  tons  for  the  year 

1916  over  the  year  1916.  On  January  1,  1916,  the  stocks  of  news- 
print paper  carried  by  manufacturers  were  about  69,000  tons.  At  the 
end  of  1916  these  stocks  were  reduced  to  approximately  42,000  tons. 
While  during  1916  prices  advanced  to  an  extraordinarily  high  level 
and  there  were  difficulties  in  procuring  paper,  it  is  nevertheless  a 
fact  that  newspapers  were  generally  able  to  secure  news-print  paper 
for  their  reasonable  requirements  if  they  would  pay  very  high  prices. 
The  quantity  manufactured  during  the  year  was  equal,  therefore, 
to  that  needed  for  reasonable  requirements  of  newspapers  within 
approximately  27,000  tons,  which  quantity  was  taken  from  the  re- 
serve stocks.  It  is  probable  that  if  publishers  will  exercise  the 
strictest  economy  the  supply  will  be  equal  to  the  requirements  for 
the  year  1917. 


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I 


134 


REPORT  ON   NEWS-PRINT  PAPER   INDUSTRY. 


FACTS  WITH  CONCLUSIONS  AND  RECOMMENDATIONS. 


135 


The  close  balance  between  supply  and  demand  inevitably  tended 
to  create  general  uneasiness.  There  is  much  evidence  that  manu- 
facturers, instead  of  attempting  to  allay  this  natural  fear  on  the 
part  of  the  publishers,  played  upon  it  deliberately.  A  panic  market 
was  the  result.  While  there  was  approximately  enough  paper  to  go 
around,  publishers  were  fearful  that  they  could  not  get  their  supply. 
They  tried  to  place  orders  with  many  mills  and  duplicated  the  plac- 
ing of  their  orders  for  the  purpose  of  being  assured  of  a  supply. 
Newspapers  which  had  difficulty  in  closing  contracts  or  which  were 
fearful  lest  their  supply  under  contract  would  prove  inadequate  went 
into  the  open  market.  The  result  was  that  requirements  were  made 
to  appear  many  times  greater  than  they  actually  were,  and  a  fic- 
titious demand  was  thus  created,  which  produced  a  condition  of 
panic  with  panic  prices. 

While  these  conditions  obtained  and  would  naturally  have  some 
influence  upon  price,  it  is  the  opinion  of  the  Commission  that  the 
prices  were  actually  made  in  the  industry  without  the  operation  of 
free  competitive  influences  in  their  determination.  By  means  of  a 
trade  association,  organized  ostensibly  for  a  lawful  purpose,  condi- 
tions in  the  market  were  substantially  influenced  in  a  manner  which 
would  not  be  possible  under  conditions  of  free  competition.  Concert 
of  action  was  made  possible  through  this  association  in  the  matter 
of  discouraging  new  production  of  news-print  paper,  in  the  allotment 
of  customers,  in  the  promotion  of  fear  that  the  supply  would  not  be 
equal  to  the  demand,  in  disseminating  propaganda  justifying  higher 
prices  because  of  alleged  higher  costs,  and  in  other  ways.  The  in- 
crease in  the  prices  charged  are  not  justified  by  the  increased  costs  of 
production. 

Section  2.  Conclusions. 

From  the  facts  disclosed  during  the  investigation,  the  Conunission 
submits  the  following  conclusions : 

1.  The  increases  in  the  selling  prices  of  news-print  paper  for  the 
year  1917  in  most  cases  were  greater  than  could  be  justified  by  the 
increases  in  cost. 

2.  There  is  not  now,  and  has  not  been,  such  a  serious  shortage  of 
news-print  paper  as  to  warrant  the  extremely  high  prices  generally 
charged.  The  Commission  finds  that  there  is  enough  news-print 
paper  to  meet  all  the  strictly  necessary  demands  of  publishers  during 
1917.  There  is,  however,  a  close  balance  between  supply  and  demand, 
so  that  the  strictest  economy  in  the  use  of  news-print  paper  is  neces- 
sary. 

3.  The  system  of  distribution  of  news-print  paper  is  faulty.  By 
reason  of  this  fact  this  close  balance  between  supply  and  demand 
could  easily  be  developed  into  local  shortage,  and  this  condition  was 
taken  advantage  of  and  exaggerated  by  artificial  means.    Reports  of 


alleged  shortage  were  widely  circulated  for  the  purpose  of  justifying 
high  prices.  Keen  competition  among  the  comparatively  unorganized 
publishers,  who,  in  their  anxiety  to  assure  themselves  of  their  neces- 
sary supplies  of  paper,  bid  feverishly  in  the  open  market,  helped  to 
make  the  situation  more  acute. 

4.  The  increase  in  prices  has  been  due  in  part  to  the  fact  that 
free  competition  has  been  seriously  restricted  in  the  news-print  paper 
industry.  Important  manufacturers  in  the  United  States  and  Canada 
were  banded  together  to  secure  unreasonable  profits. 

6.  Some  small  publishers  have  already  been  put  out  of  business 
and  more  are  likely  to  suffer  the  same  fate,  and  some  large  publishers 
will  be  financially  ruined  and  many  others  will  be  unable  to  make  any 
profits  unless  conditions  are  remedied. 

6.  While  jobbers  have  been  severely  criticized  in  respect  to  the 
prices  charged  by  them,  the  Commission  has  found  many  instances  in 
which  the  mills  have  compelled  the  jobbers  to  pay  exceedingly  high 
prices,  and  in  those  instances  it  has  been  necessary  for  the  jobbers  in 
turn  to  charge  extremely  high  prices  to  their  customers.  In  some 
instances,  however,  it  was  found  that  jobbers  who  bought  paper  at 
reasonably  low  prices  took  advantage  of  their  opportunity  to  sell  at 
unreasonably  high  prices.  > 

Section  3.  Efforts  of  the  Commission  to  afford  relief. 

The  Commission,  while  directing  its  efforts  to  a  discovery  of  the 
facts  affecting  the  economic  and  legal  sides  of  the  question,  sought 
also,  within  the  limitations  of  its  power,  to  restore  competitive  con- 
ditions in  the  industry  and  at  the  same  time  to  bring  such  immediate 
practical  relief  as  would  prevent  serious  financial  distress  and  injury 
to  publishers  while  the  processes  of  competition  were  being  restored. 
Public  hearings  were  held,  at  which  these  several  interests  appeared, 
and  many  conferences  were  had  with  them.  The  efforts  of  the  Com- 
mission were  made  in  the  public  interest,  but  some  of  them  without 
express  authority  of  law.  Its  aim  was  to  act  as  arbiter  in  the 
situation  for  the  purpose  of  securing  prompt  relief.  It  was  par- 
ticularly desired  to  provide  some  means  whereby  the  smaller  publish- 
ers could  be  relieved  with  respect  to  their  most  pressing  necessities. 
The  various  interested  parties,  however,  failed  to  come  to  any  agree- 
ment among  themselves.  But,  largely  as  a  result  of  the  Commission's 
activities,  some  substantial  relief  was  obtained  for  smaller  publishers 
in  various  sections  of  the  country  through  the  cooperation  of  certain 
manufacturers,  jobbers,  and  publishers. 

Proposal  of  manufactfurers. — Following  the  activities  of  the 
Commission,  certain  manufacturers  producing  in  the  aggregate  about 
one-third  of  the  total  tonnage  of  news-print  paper  in  the  United 


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136 


RKPOBT  ON   NEWS-PRINT  PAPER   INDUSTRY. 


States  and  Canada  submitted  the  following  proposal  to  the  Com- 
mission : 

Whereas  among  manufacturers  and  publishers  there  are  diflferences  of  opinion 
regarding  the  increase  since  January,  1916,  in  the  cost  of  production  of  news- 
print paper  In  the  United  States,  and  regarding  the  Increased  prices  to  which 
manufacturers  are  entitled  for  news-print  paper  sold  for  use  in  the  United 
States  for  the  six  months'  period  beginning  March  1,  1917,  talking  into  con- 
sideration the  Increase  In  their  cost  of  production  and  other  conditions  affect- 
ing such  manufacturers ;  and 
Whereas  the  undersigned   manufacturers  are  desirous  of  cooperating  In  any 
plan  that  may  be  approved  by  the  Federal  Trade  Commission  providing  for  a 
more  effective  distribution  of  news-print  paper  among  the  smaller  publishers; 
and 
Whereas  the  undersigned  manufacturers  are  desirous  of  submitting  these  mat- 
ters to  the  arbitrament  of  the  Federal  Trade  Commission : 
Now,  therefore,  Each  of  the  undersigned  does  hereby  request  the  Federal 
Trade  Commission  to  find,  fix,  and  determine  forthwith— 

(a)  The  probable  or  estimated  Increased  cost  of  production  of  standard  news- 
print paper  in  the  United  States  duning  the  period  of  time  commencing  March  1, 
1917,  and  ending  September  1,  1917,  over  the  cost  of  production  of  news-print 
paper  in  the  United  States  during  the  year  1916. 

(6)  What  price  per  hundred  pounds  at  the  mill  would  be  a  fair  and  reason- 
able price  for  the  sale  of  such  paper  for  use  in  the  United  States  during  the 
aforesaid  period  of  time  from  March  1,  1917,  to  September  1,  1917,  taking  into 
consideration  such  increased  cost  of  production  and  other  conditions  affecting 
respective  manufacturers  which  the  Commission  may  deem  pertinent  at  this 
time? 

And  each  of  the  undersigned  does  hereby  agree  that  it  will  carry  out  and 
complete  at  the  prices  and  on  the  terms  therein  stated  all  of  its  existing  con- 
tracts for  the  sale  of  such  paper  which  were  made  at  a  price  or  prices  as  low 
as  or  lower  than  the  price  or  prices  so  found,  fixed,  or  determined  by  said 
Commission  to  be  fair  and  reasonable  for  said  period  commencing  March  1, 
1917,  and  ending  September  1,  1917,  and  that  with  respect  to  contracts  which 
are  for  higher  prices  than  those  so  found,  fixed,  and  determined  by  said  Com- 
mission for  said  last-mentioned  period  of  time  It  will  supply  such  contract 
purchasers  with  their  necessary  requirements  only  of  such  paper  at  a  price  not 
in  excess  of  the  amount  so  found,  fixed,  or  determined  by  the  Federal  Trade 
Commission  to  be  a  fair  and  reasonable  maximum  price  on  such  paper,  as 
aforesaid,  during  said  period  of  time  from  March  1,  1917,  to  September  1,  1917. 
The  purpose  of  limiting  such  last-mentioned  contract  purchasers  to  an 
amount  of  paper  which  will  supply  their  necessary  requirements  only  is  to 
enable  each  of  the  undersigned  to  supply  other,  and  particularly  small,  pub- 
lishers who  have  no  contracts  with  sufficient  paper  to  cover  their  necessary 
requirements  from  time  to  time  during  said  period  of  time;  and  consequently 
in  the  event  that  any  dispute  arises  at  any  time  between  any  undersigned 
manufacturer  and  such  contract  purchaser,  or  that  any  complaint  is  made  to 
the  Federal  Trade  Commission  at  any  time  concerning  the  question  as  to 
whether  or  not  such  contract  purchaser  is  getting  more  than  his  necessary 
requirements  only  of  paper  during  said  period  of  time,  then,  and  in  that  event, 
the  Federal  Trade  Commission  shall  have  the  right,  and  Is  hereby  authorized, 
to  determine  in  each  of  said  instances  the  amount  of  paper  which  is  needed 
to  supply  the  necessary  requirements  only  of  such  contract  purchaser,  and  the 


FACTS  WITH  CONCLUSIONS  AND  RECOMMENDATIOXS. 


137 


latter  shall  not  be  entitled  to  receive  any  reduction  from  his  contract  price  for 
any  paper  during  said  period  unless  he  has  filed  with  this  Commission  his 
written  consent  to  this  arbitration  and  its  terms. 

And  each  of  the  undersigned  does  hereby  agree  that  it  will,  so  far  as  lies  in 
Its  power,  limit  each  contract  purchaser  to  his  necessary  requirements  only 
and  sell  to  its  customers,  respectively,  who  have  no  contracts  sufficient  paper 
to  meet  their  necessary  requirements  only  during  said  period  of  time  at  a  price 
not  in  excess  of  the  amount  found,  fixed,  and  determined  by  the  Federal  Trade 
Commission  to  be  a  fair  and  reasonable  maximum  price  on  such  paper. 

While  this  arrangement  is  to  run  for  only  six  months,  it  is  understood  that 
the  contract  prices  named  in  contracts  with  publishers  heretofore  made  which 
may  be  reduced  by  the  action  of  the  commission  herelnunder  are  not  here- 
after to  determine  the  price  to  be  paid  for  news-print  paper  by  such  contract 
purchasers  as  consent  to  this  arbitration. 

And  the  undersigned  does  also  agree  and  bind  itself  to  cooperate  with  the 
Federal  Trade  Commission  in  carrying  out  any  plan  approved  by  the  Com- 
mission to  bring  about  the  distribution  of  news-print  paper  for  the  purpose 
of  securing  prompt  and  effective  relief  to  the  small  publishers  of  the  United 
States  and  which  will  enable  such  small  publishers,  through  cooperative  buy- 
ing, to  secure  their  news-print  paper  at  practically  the  same  price  as  that 
which  is  herelnunder  to  be  enjoyed  by  the  larger  publishers,  due  provision 
being  made  for  any  additional  cost  of  distribution.  New  publishers  shall  not 
be  charged  more  than  said  maximum  price  so  found,  fixed,  and  determined 
by  the  Federal  Trade  Commission  during  said  period  of  time. 

And  each  of  the  undersigned,  while  not  admitting  but  on  the  contrary 
expressly  denying  that  any  law  has  been  violated  by  it,  does  nevertheless 
hereby  agree  that  the  Federal  Trade  Commission  may,  if  it  finds  it  necessary 
or  advisable,  proceed  forthwith  to  make  recommendations  for  the  readjust- 
ment of  its  business  in  order  that  it  may  maintain  its  organization,  manage- 
ment,  and  conduct  of  business  in  accordance  with  law. 
Respectfully  yours, 

International  Papes  Co., 
By  P.  T.  Dodge,  President. 

ABrriBi  PowEB  &  Papeb  Co.  (Ltd.), 
By  Alexander  Smith,  Vice  President. 

The  Spanish  River  Pulp  &  Papeb  Mills  (Ltd.), 
By  Geo.  H.  Mead,  President. 

The  Laukentide  CJo.  (Ltd.), 
By  Geobge  Chahoon,  Jr.,  President. 

The  Belgo-Canadian  Pulp  &  Papeb  Co^ 
By  W.  H.  BiERMAN,  General  Manager. 

The  Nobthwest  Papeb  Co., 
By  C.  I.  McNaib,  General  Manager, 

Tagqarts  Paper  Co., 
By  G.  C.  Sherman,  President, 
Febbuabt  15,  1917. 

To  the  Fedebal  Trade  Commission, 

Washington,  D.C.^ 

Action  of  publishers. — When  the  proposal  of  the  manufacturers 
was  made  known  to  newspaper  publishers  a  number  of  the 
larger  of  them  agreed  that  if  the  price  in  their  contracts  made  for 
the  purchase  of  paper  should  be  reduced  to  the  maximum  price  to  be 


■JbtttaBMH 


tMnaerwtarttii.-.wtt-'"' 


138 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


cletennined  by  the  Commission  for  the  period  of  six  months  from 
March  1,  1917,  they  would  release  each  month  up  to  5  per  cent  of 
their  tonnage  under  contract,  it  being  understood  that  such  released 
paper  would  be  used  in  the  manner  to  be  determined  by  the  Commis- 
sion to  help  publishers  without  contracts. 

Action  of  jobbers. — As  the  needs  of  the  smaller  publishers, 
widely  scattered  throughout  the  country,  were  most  urgent,  and 
since  they  were  largely  dependent  upon  the  paper  jobbers  for  their 
supplies,  and  as  such  jobbers  appeared  to  be  the  only  means  at  hand 
for  supplying  these  small  publishers  promptly,  the  Commission 
deemed  it  advisable  to  call  the  jobbers  for  a  conference.  The  result 
was  that  the  leading  jobbers  entered  into  an  agreement  to  handle 
and  distribute  such  news-print  paper  as  the  Commission  might  place 
at  their  disposal  at  fair  and  reasonable  maximum  rates  of  com- 
pensation as  follows: 

Single  car  lots  direct  from  mill,  not  to  exceed  5  per  cent  on  f.  o.  b.  mill 
price. 

Less  than  carload  lots,  but  not  less  than  ton  lots,  delivered  from  ware- 
house, not  to  exceed  12i  per  cent  on  cost  In  warehouse. 

Less  than  ton  lots,  delivered  from  warehouse,  not  to  exceed  20  per  cent  on 
cost  in  warehouse. 

The  agreement  also  provided  that  the  jobbers  during  the  period 
^covered  by  it  would  handle  all  their  news-print  tonnage  sold  to 
publishers  on  the  above  rates  of  gross  profit  figured  on  current  re- 
placement value,  and  also  that  they  would  sell  for  cash  or  on  ap- 
proved credit  in  carload  lots  to  the  representative  of  any  associa- 
tion of  publishers  at  the  same  prices  as  to  individuals. 

Findings  of  the  Commission  as  to  fair  prices. — Two  specific  phases 
of  relief  were  presented  in  the  proposal  of  the  manufacturers  set 
out  above,  (1)  the  matter  of  price  reduction  directly  effecting  the 
saving  of  millions  to  publishers,  and  (2)  a  more  equitable  distribu- 
tion of  paper  supply  directly  benefiting  the  smaller  publishers,  not 
only  saving  them  money,  but  preserving  many  of  them  from  suspen- 
sion and  bankruptcy. 

The  second  phase,  that  relating  to  the  distribution  of  paper  to 
the  smaller  publishers,  while  requiring  a  relatively  small  quantity 
of  paper,  was  the  most  difficult  of  accomplishment.  It  was  hoped 
that  this  paper  would  be  obtained  in  part  by  the  proposal  of  the 
larger  publishers  indicated  above. 

The  proposal  of  the  manufacturers  and  the  action  of  jobbers  and 
publishers  having  been  defined,  the  Commission  decided  to  accept  the 
difficult  task  of  arbiter.  In  so  doing  it  did  not  purport  to  act  as  an 
agency  of  government  to  fix  prices,  but,  on  the  contrary,  to  serve 
only  as  an  arbitrator. 


FACTS  WITH  CONCLUSIONS  AND  BECOMMENDATIC  NS. 

The  Commission's  findings  were  as  follows : 


139 


(1)  That  a  fair  and  reasonable  price  for  the  sale  of  standard  news-print  paper  in 
rolls  by  each  of  the  aforesaid  signatory  manufacturers  for  use  in  the  United 
States  during  the  six  months*  period  of  time  beginning  March  1,  1917,  and  end- 
ing August  31,  1917,  is  the  sum  of  $2.50  per  100  pounds  f.  o.  b.  at  the  mill  in 
carload  lots  and  is  the  sum  of  $2.75  per  100  pounds  f.  o.  b.  at  the  mill  in  less- 
than-carload  lots. 

(2)  That  a  fair  and  reasonable  price  for  the  sale  of  standard  news-print 
paper  in  sheets  by  each  of  the  aforesaid  signatory  manufacturers  for  use  in 
the  United  States  during  the  aforesaid  six  months'  period  of  time  is  the  sum 
of  $3.25  per  100  pounds  f.  o.  b.  at  the  mill  in  carload  lots  and  is  the  sum  of 
$3.50  per  100  pounds  f.  o.  b.  at  the  mill  in  less-than-carload  lots. 

(3)  That  no  publisher  or  jobber  who  has  an  existing  contract  with  any  of 
the  aforesaid  signatory  manufacturers  for  standard  news-print  paper  at  a 
higher  price  or  prices  than  is  hereby  found  to  be  fair  and  reasonable  shall  be 
entitled  to  receive  or  be  given  the  benefit  of  such  reduced  prices  unless  he 
files  with  this  Commission  prior  to  March  20,  1917,  his  written  agreement  to 
waive  and  release  for  sale  and  distribution  to  publishers  only,  who  have  no 
contracts,  5  per  cent  of  the  total  amount  of  tonnage  specified  in  such  contract. 

(4)  That  if  any  extraordinary  new  conditions  hereafter  arise  which  make  It 
unjust  to  the  aforesaid  signatory  manufacturers  to  continue  the  aforesaid  prices 
during  the  full  period  of  said  six  months,  this  Commission  will  readjust  the 
same  for  the  whole  or  any  remaining  part  of  the  three  months  commencing 
June  1  and  ending  August  31,  1917 ;  provided  that  said  signatory  manufacturers 
file  with  this  Commission  their  written  request  so  to  do ;  and  provided  further 
that.  In  the  opinion  of  this  Commission,  the  facts  presented  In  such  petition  re- 
quires such  action  In  order  to  prevent  plain  Injustice. 

In  making  this  award  the  Commission  stated  that  it  was  of  the 
opinion  that  the  foregoing  prices  for  news-print  paper  would  not 
produce  a  fair  and  reasonable  profit  for  some  of  the  smaller  mills 
under  the  unusual  conditions  now  existing  as  to  the  cost  of  ground 
wood  and  sulphite.  They  produce  not  over  18  per  cent  of  the  tonnage 
of  the  North  American  Continent. 

Further,  it  was  of  the  opinion  that  on  the  basis  of  their  respective 
costs  of  production,  the  foregoing  prices  were  also  fair  and  reason- 
able for  each  and  all  of  the  following  manufacturers  who  did  not 
join  in  this  proposal : 

Minnesota  &  Ontario  Power  Co.,  Pejepscot  Paper  Co. 

including    its    subsidiary,    the  Crown  Willamette  Paper  Co. 

Fort  Frances    Pulp  &   Paper  St.  Croix  Paper  Co. 

Co.  (Ltd.).  Price  Bros.  &  Co.  (Ltd.) 

Gould  Paper  Co.  Donnacona  Paper  Co.  (Ltd.) 

Finch,  Pruyn  &  Co.  Powell  River  Co. 
Great  Northern  Paper  Co. 

In  addition  to  the  above  companies,  the  Consolidated  Water  Power 
&  Paper  Co.  and  the  Wisconsin  River  Pulp  &  Paper  Co.  could  sell  at 
a  slight  advance  over  the  prices  named  and  make  a  fair  profit.  It 
should  also  be  stated  that  the  Great  Northern  Paper  Co.,  appearing 


•ye^yia^et^lf^-''^  'm'^:^i£'t'i^vtY^ijSIIH.'9i,Xr«'-' 


140 


REPORT   ON    NEWS-PRINT  PAPER  INDUSTRY. 


in  the  above  list,  is  and  has  been  selling  most  of  its  output  at  prices 
as  low  or  lower  than  those  named;  and  it  should  be  further  stated 
that  the  Powell  River  Co.  and  the  Crown  Willamette  Paper  Co  have 
much  tonnage  under  long-time  contracts  at  lower  prices. 

As  soon  as  this  award  was  announced  a  majority  of  the  contract 
customers  of  the  signatory  manufacturers  signed  the  agreement 
with  the  Commission  to  release  5  per  cent  of  their  tonnage  and  to 
eliminate  returns.  Some  of  the  customers  of  the  International 
Paper  Co.  found  it  impossible  to  sign  this  agreement,  because  they 
had  already  been  reduced  in  their  tonnage  from  10  to  20  per  cent 
below  what  they  consumed  during  the  preceding  year.  Other  cus- 
tomers of  the  International  Paper  Co.  refrained  from  signing  the 
agreement  fearing  that  it  would  cancel  their  contracts  and  leave 
them  in  the  open  market  at  the  end  of  the  period  covered  by  the  ar- 
bitration. This  fear  was  incited  in  some  instances  by  the  activities 
of  the  International's  sales  agents. 

In  order  to  reach  a  satisfactory  settlement  of  this  and  other  doubt- 
ful matters  connected  with  the  arbitration,  negotiations  were  con- 
tinued with  the  signatory  manufacturers  during  the  month  of  March, 
1917.  Efforts  were  also  made  during  this  period  to  induce  several 
other  large  manufacturers  to  join  in  the  agreement.  Before  these 
matters  were  disposed  of  the  Commission  was  notified  by  the  Depart- 
ment of  Justice  that  it  intended  to  continue  proceedings  against  the 
news-print  manufacturers. 

On  April  11,  1917,  the  Federal  grand  jury  for  the  southern  dis- 
trict of  New  York  brought  indictments  against  the  following  news- 
print manufacturers  for  violation  of  the  Sherman  law : 

Philip  T.  Dodge,  International  Paper  Co. 

George  H.  Mead,  Spanish  River  Pulp  &  Paper  Mills  (Ltd.). 

Alexander  Smith,  Abitibi  Power  &  Paper  Co. 

George  Chahoon,  jr.,  Laurentide  Co. 

G.  H.  P.  Gould,  Gould  and  Donnacona  Paper  Cos. 

E.  W.  Backus,  Minnesota  &  Ontario  Paper  Co. 

Frank  J.  Sensenbrenner,  Kimberly-Clark  Co. 
The  first  four  of  the  indicted  manufacturers  were  signatories  to  the 
arbitration  agreement. 

Having  heard  nothing  from  these  manufacturers  after  the  in- 
dictments were  brought,  the  Commission  on  April  21, 1917,  sent  them 
a  list  of  their  contract  customers  who  had  signed  up  and  requested 
them  to  state  what  means  they  had  taken  to  give  these  publishers  the 
benefits  of  the  arbitration  agreement,  and  what  disposition  they  were 


FACTS  WITH  CONCLUSIONS  AND  RECOMMENDATIONS. 


141 


prepared  to  make  of  the  5  per  cent  of  contract  tonnage  of  paper  sur- 
rendered by  these  publishers. 

To  this  letter  the  manufacturers  replied  that  in  view  of  the  in- 
dictments, which  were  unexpected  when  the  agreement  was  entered 
into,  they  desired  to  give  the  matter  further  consideration.  During 
the  last  week  of  May,  1917,  counsel  for  two  of  the  indicted  manu- 
facturers notified  the  Commission  that  his  clients  had  decided  to 
withdraw  from  the  arbitration  submission  of  February  15, 1916. 

Section  4.  Eecommendation. 

The  withdrawal  of  the  largest  manufacturers  from  the  arbitration 
arrangement  resulted  in  the  failure  of  the  effort  of  the  Commisssion 
to  bring  relief  to  the  situation  by  voluntary  cooperation  of  the  inter- 
ested parties.  It,  therefore,  has  decided  to  recommend  as  a  war  emer- 
gency measure  that  Congress  by  appropriate  legislation  provide: 

(1)  That  all  mills  producing  and  all  agencies  distributing  print 
paper  and  mechanical  and  chemical  pulp  in  the  United  States  be  op- 
erated on  Government  account ;  that  these  products  be  pooled  in  the 
hands  of  a  Government  agency  and  equitably  distributed  at  a  price 
based  upon  the  cost  of  production  and  distribution,  plus  a  fair  profit 
per  ton. 

(2)  That  pursuant  thereto  some  Federal  agency  be  empowered  and 
directed  to  assume  the  supervision  and  control  thereof  during  the 
pendency  of  the  war. 

(3)  That,  by  reason  of  the  fact  that  approximately  75  per  cent  of 
the  production  of  news-print  paper  in  Canada  comes  into  the  United 
States,  proper  action  be  taken  to  secure  the  cooperation  of  the  Cana- 
dian Government  in  the  creation  of  a  similar  governmental  agency 
for  the  same  function,  which  shall  be  clothed  with  power  and  au- 
thority to  act  jointly  with  the  governmental  agency  of  the  United 
States  for  the  protection  of  the  consumers  and  manufacturers  of  print 
paper  and  the  public  of  the  United  States  and  Canada. 

(4)  That  in  case  the  Canadian  Government  shall  not  join  in  such  a 
cooperative  enterprise,  then  importation  of  paper  and  mechanical 
and  chemical  pulp  into  the  United  States  shall  be  made  only  on  Gov- 
ernment account  to  or  through  the  Federal  agency  charged  with  such 
supervision  and  distribution. 


% 


i 


EXHIBITS. 


Exhibit  1. 

PETITION  OF  I'HE  NEWS  PRINT  MANUFACTURERS  ASSOCIATION 
TO  THE  FEDERAL  TRADE  COMMISSION. 

In  thk  Matter  of  the  Owen  Resolution  Respecting  Print  Paper. 

To  the  Honorable,  Federal  Trade  CJommisslon  of  the  United  States  of  America : 
Your  petitioner,  the  Executive  Committee  of  the  News  Print  Manufacturers 
Association,  respectfully  represents: 

1.  That  the  News  Print  Manufacturers  Association  Is  an  organization  formed 
by  a  number  of  manufacturers  of  news-print  paper  in  the  United  States  and 
Canada  for  the  purpose  of  promoting  the  interest  of  the  print  paper  industry 
in  said  countries. 

2.  The  attention  of  the  undersigned  has  been  called  to  the  fact  that  a  number 
of  resolutions  have  been  introduced  into  the  Congress  of  the  United  States  urg- 
ing that  an  investigation  be  made  by  this  Commission  with  a  view  of  deter- 
mining the  reason  for  the  alleged  increase  to  the  publishers  in  the  United  States 
of  the  cost  of  print  paper ;  and  that  Mr.  Owen  submitted  the  following  resolu- 
tion which  was  considered  and  agreed  to: 

t64th  Cong.,  1st  sess. ;  S.  Res.  177 ;  In  the  Senate  of  the  United  States ;  Apr.  24,  1916.] 

Mr.  Owen  submitted  the  following  resolution;  which  was  considered  and 
agreed  to. 

BESOLUnON. 

Resolved,  That  the  Trade  Commission  is  hereby  requested  to  Inquire  into 
the  increase  of  the  price  of  print  paper  during  the  last  year  and  ascertain 
whether  or  not  the  newspapers  of  the  United  States  are  being  subjected  to 
unfair  practices  in  the  sale  of  print  paper. 

3.  That  the  undersigned  manufacturers  of  print  paper  who  manufacture 
approximately  fifty  (50%)  per  cent  of  the  total  tonnage  of  print  paper  used 
in  the  United  States,  respectfully  represents  to  your  Honorable  Commission : 

(a)  That  about  eighty-five  per  cent  of  the  news-print  paper  manufactured 
in  the  United  States  and  Canada  is  sold  on  annual  contracts  and  these  contract 
prices  have  not  increased  more  than  one  per  cent  during  the  past  twelve 
months,  and  will  not  average  any  higher  than  the  price  at  which  it  was  con- 
tracted and  sold  during  the  past  ten  years,  whereas  the  price  of  book  and 
wrapping  paper  have  increased  approximately  one  hundred  per  cent. 

(b)  That  because  of  adverse  newspaper  comment  In  news  items  and  inter- 
views in  the  public  press  the  undersigned  as  manufacturers  of  print  paper  have 
been  grossly  misrepresented. 

And  respectfully  request  your  Honorable  Commission  that  as  soon  as  it  can 
be  done  an  investigation  be  had  by  your  body  into  this  question  in  accordance 

142 


EXHIBITS. 


143 


with  the  Senate  resolution  above  set  forth;  and  these  petitioners  respectfully 
state  that  they  will  consider  it  a  privilefge  to  furnish  this  Commission  any  in- 
formation within  their  power. 


Respectfully  submitted. 


News  Print  Manufacturers  Association, 
Philip  C.  Dodge, 
George  H.  Mead, 
J.  H.  A.  Acer, 
E.  W.  Backus, 
G.  H.  P.  Gould, 

Executive  Committee, 
By  Timothy  T.  Ansberry, 

Counsel. 


Exhibit  2. 

THE   FEDERAL   TRADE   COMMISSION'S   SUGGESTION   OF   SMALLER 

SUNDAY  PAPERS. 

The  letter  below  was  sent  to  all  Sunday  newspapers  in  the  United  States : 

October  14,  1916. 

Dear  Sir:  In  connection  with  its  investigation  of  news  print  prices,  the 
Commission  has  given  serious  consideration  to  possible  means  of  prevent- 
ing the  suspension  of  papers  because  of  the  increasing  scarcity  and  ad- 
vancing prices.  The  present  situation  can  only  be  alleviated  by  increasing 
the  output  or  reducing  consumption.  The  Commission  has  conferred  with 
a  number  of  prominent  publishers  regarding  ways  to  reduce  consumption 
in  addition  to  the  cutting  off  of  returns,  eliminating  wastes,  etc.,  which 
many  newspapers  are  reported  to  have  already  done.  These  publishers  are 
of  the  opinion  that  there  is  still  an  opportunity  to  effect  a  considerable 
reduction  in  consumption  by  cutting  down  the  size  of  Sunday  papers.  They 
feel  that  the  elimination  of  certain  features  would  meet  with  public  ap- 
proval and  would  not  decrease  the  revenues  of  the  publishers.  The  paper 
saved  by  cutting  down  the  size  of  one  large  Sunday  edition  several  pages 
would  be  sufficient  to  keep  a  number  of  smaller  papers  supplied  for  a  con- 
siderable time.  Unless  present  supplies  of  paper  can  be  increased,  which 
does  not  now  seem  probable,  such  unselfish  action  on  the  part  of  the  large 
city  papers  appears  to  be  the  only  means  that  will  save  many  of  the 
smaller  publishers  from  going  out  of  business. 

The  Commission  asks  your  cooperation  in  this  matter  and  would  like  to 
know  your  attitude  toward  this  proposition.  The  Commission  would  also 
appreciate  any  suggestions  that  occur  to  you  regarding  practical  ways  of 
making  this  proposal  effective. 

A  franked  envelope,  which  requires  no  postage,  is  enclosed  for  your  reply. 
Very  truly  yours, 

Edward  N.  Hurley, 

Chairman. 

Answers  to  this  letter  were  received  from  more  than  100  publishers.  The 
purport  of  these  answers  has  been  summarized  below.  In  order  to  measure 
their  significance  more  accurately  they  have  been  classified  according  to  cir- 
culation. 

The  Chicago  Tribune,  whose  Sunday  edition  has  a  circulation  of  over 
600,000,  had  noticed  a  detriment  to  its  business  from  a  cut  of  four  pages  in 
the  Sunday  color  section,  and  did  "  not  feel  warranted  in  making  a  further  cut 
in  the  Sunday  paper." 


144 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


The  Boston  Post,  which  has  a  circulation  of  over  450,000,  answered:  In  part, 

as  follows: 

We  have  also  materially  reduced  the  size  of  our  issues,  using  two  pages 
less  several  days  per  week  than  we  would  use  if  there  were  an  unlimited 
supply  of  news  print  We  are  prepared  to  ro  even  further  than  this  In 
cooperation  with  other  papers,  and  would  willingly  omit  one  edition  each 
week.  That  is  a  move,  however,  so  radical  that  it  could  not  be  accomplished 
without  a  general  agreement. 

A  publishing  company  in  the  Middle  West,  whose  dallies  In  different  cities 
have  a  combined  circulation  of  over  200,000,  reported  lack  of  success  In  an 
attempt  to  obtain  the  cooperation  of  other  publishers  in  putting  the  proposals 
of  the  Commission  Into  practice.  The  hope  was  expressed  that  the  Ck)mmission 
might  be  able  to  bring  about  cooperation  under  a  signed  agreement. 

Replies  were  received  from  nine  pai)ers,  each  with  a  circulation  of  more 
than  100,000  but  less  than  200,000.  Six  of  these  announced  that  they  were 
already  acting  In  accordance  with  the  proposals  of  the  Commission.  A  Pitts- 
burgh paper  said  "  in  Pittsburgh  the  publishers  have  already  considered  and 
taken  steps  to  lessen  the  consumption  of  paper  in  the  Sunday  editions,"  and  rec- 
ommended that  the  Commission  "bring  the  various  publishers  in  their  re- 
spective cities  into  consultation."  This  plan  was  also  advocated  by  a  Minne- 
apolis managing  editor  as  follows: 

To  me  the  most  practical  means  to  this  end  seems  to  lie  In  personal 
efforts   of   the   members   of   the   Federal   Trade   Commission   In   bringing 
about  agreements  in   any  one  locality   to  an  approximately  uniform  cut 
in  the  Sunday  issues.     I  believe  that  If  you  were  to  meet  personally  the 
managers  of  newspapers  In  each  of  the  large  cities  you  could  effect  a 
decided  cut  Ir.  almost  all  cases. 
A  St.  Louis  paper  in  this  group  reported  that  In  July,  August  and  Septem- 
ber It  had  reduced  its  consumption  an  average  of  four  tons  a  day  below  that 
of  June,  1916."    Another  of  this  group  wrote  as  follows : 

We  are  in  receipt  of  your  communication  in  which  you  recommend  that 
large  Sunday  newspapers  cut  down  the  size  of  their  publication  by  elimi- 
nating several  pages  of  uninteresting  features. 

You  were  right  In  surmising  that  such  a  move  would  meet  with  the 
public  approval  for  the  reason  that  we  have  made  a  success  of  a  Sunday 
newspaper  that  carries  no  feature  supplements  whatsoever  outside  of 
the  usual  comic  supplement  for  the  little  folks. 

The  Sunday  Journal  averages  from  twenty-eight  to  thirty-two  pages  and 
sells  for  two  cents.  In  five  years'  time  we  have  built  up  a  circulation  which 
is  practically  double  that  of  one  of  our  five  cent  competitors  whose  publica- 
tion is  one  of  the  old  style  Sunday  newspapers  and  fully  five  times  that  of 
one  of  the  other  old  line  Sunday  newspapers. 

The  publisher  of  a  New  York  paper  which  had  made  "sharp"  reductions 
thinks  that  It  "  is  bound  to  hurt  Sunday  papers  very  much "  but  that  "  the 
demands  of  the  situation  are  Imperative."  He  expressed  his  desire  "to  co- 
operate further"  In  "common  action  by  all  the  Sunday  newspapers"  or  by 
all  of  "this  particular  community."  A  Baltimore  paper  said:  "We  do  not 
know  how  it  will  be  possible  for  us  to  carry  our  revision  any  ilurther."  A 
Detroit  paper  in  this  group  which  had  made  considerable  reductions  In  Its 
Sunday  editions  asked: 

Why,  at  the  same  time,  should  not  the  publishers  of  the  big  afternoon 
newspapers  ♦  ♦  *  be  asked  to  bear  their  just  share  of  this  retrench- 
ment by  reducing  the  number  of  editions  daily  to  a  necessary  minimum. 
♦  ♦  *  It  is  a  problem  ♦  •  ♦  which  ♦  ♦  ♦  will  require  a  con- 
certed effort  and  the  unanimous  cooperation  of  all  the  newspapers  of  the 

country.  

■  — -.^— ^ — . ■ — —    ^_— — ^^— — ^^— ^— — ^ 

•  It  Is  not  improbable  that  Its  consumption  tn  June  was  abnormally  heavy  on  aroount 
of  the  political  conventions  in  that  month. 


EXHIBITS. 


145 


Of  papers  having  a  circulation  of  over  50,000  but  under  75,000,  seven  made 
replies.  Six  of  these  reported  that  they  had  already  put  the  recommenda- 
tions into  practice.  One  publisher  argued  for  the  large  newspaper  where 
quantity  Is  not  obtained  at  the  expense  of  quality,  "in  order,"  as  he  writes, 
"  to  do  my  proper  part  in  counteracting  any  impression  you  may  have  that 
ordinary  newspapers,  as  commonly  operated  at  present,  can  be  Improved  by 
drastic  cuts  in  their  size."  He  quoted  the  experience  of  his  own  paper,  how- 
ever, to  show  "  that  mere  bulk  is  not  essential  to  success  in  dally  journalism." 
The  publisher  of  a  Seattle  paper  in  this  group  wrote: 

I  recently  made  a  canvass  of  the  papers  of  Portland,  Oregon,  of  San 
Francisco,  and  of  Los  Angeles,  California,  and  could  not  find  a  case  where 
any  newspaper  in  either  of  those  three  cities  had  made  the  slightest  effort 
toward  economy  In  the  use  of  white  paper. 

A  Pittsburgh  editor  wrote  "  if  other  cities  were  making  the  same  efforts 
in  the  way  of  economies  that  Plttsburgers  are,  it  would,  I  believe,  do  much 
to  solve  the  paper  situation."  A  Minnesota  publishing  company  wrote  as 
follows : 

We  have  been  making  drastic  cuts  in  the  use  of  white  paper  since  last 
July.  We  are  prepared  to  go  to  any  extent  in  this  direction  that  safety 
and  common  sense  and  cooperation  on  the  part  of  our  competitors  in  St. 
Paul  and  Minneapolis  will  permit. 

A  Mississippi  Valley  publishing  company  has  been  so  successful  in  asking 
higher  prices  for  Its  newspapers  than  are  customary  that  its  contribution  is 
{^ven  below  almost  In  full: 

The  American  publishers  have  violated  all  of  the  fundamental  rules 
of  business.  The  whole  business  Is  characterized  by  waste  and  lack  of 
system.  There  is  more  waste  and  more  incompetence  in  the  management 
of  American  newspapers  than  In  any  other  thing  in  the  United  States 
except  In  one  of  the  large  telegraph  companies.  There  is  a  provincialism 
among  publishers  that  Is  distressing.  Newspaper  publishers  are  crazy 
about  circulation.  In  their  greed  for  circulation  they  put  on  exx)enses 
without  regard  to  where  the  money  is  coming  from.  They  hold  the  price 
of  their  paper  down  and  resort  to  all  sorts  of  schemes  to  Increase  adver- 
tising. In  years  past  they  have  used  their  increased  circulation  as  a  club 
for  higher  rates.  Now  the  rates  have  got  to  a  point  where  the  advertiser 
cannot  afford  to  pay  more.  The  added  circulation  gives  him  no  more  value, 
and  the  publisher  now  is  at  the  end  of  his  rope.  The  big  fellows  are  calling 
out  to  the  little  ones  to  save  their  white  paper. 

This  paper  has  never  sold  Its  white  paper  at  less  than  cost.  We  have 
always  made  a  profit  out  of  our  circulation.  The  Immediate  solution  of  this 
difficulty,  and  a  permanent  one,  will  be  to  raise  the  price  of  newspapers  in 
this  country  from  one  to  two  cents.  We  get  15  cents  a  week  for  our  paper. 
It  Is  retailed  to  the  newsboys,  to  news  companies,  to  hotels,  etc.  for  2^ 
cents.  Ours  is,  then,  what  we  call  a  five  cent  paper.  And  yet  charging 
this  rooney  we  have  the  largest  circulation  of  any  morning  or  evening 
newspaper  in  the  south.  We  have  the  circulation  because  with  our  mar- 
gin of  profit  on  white  paper,  and  with  our  profit  from  advertising,  we  are 
enabled  to  buy  news  of  quality  and  quantity  that  makes  the  paper  worth 
the  money.  Those  one-cent  papers  In  New  York  are  wholesaled  at  from 
50  to  60  cents  a  hundred.  This  amount  does  not  pay  for  the  weight  of  the 
white  paper.  The  New  York  and  Chicago  publisher^j  have  been  suggesting 
everything  except  the  one  thing  necessary.  I-«t  them  begin  to  economize 
themselves  before  sending  out  exhortations  to  smaller  publishers  to  econo- 
mize. If  they  were  to  raise  the  price  of  the  New  York  papers  to  two  cents, 
the  waste  circulation  would  immediately  be  saved;  the  total  number  of 
papers  printed  would  be  reduced,  but  about  the  same  publicity  would  be 
secured  and  the  value  to  the  advertiser  would  be  about  the  same. 
Whenever  the  publishers  sell  their  white  paper  for  what  it  costs  or  a  little 
more  than  it  costs,  this  paper  shortage  will  end. 

88569°     17 10 


**«iBi*-l 


146 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


For  20  years  publishers  have  thrown  the  burden  of  the  cost  of  publica- 
tion upon  advertising,  and  having  to  crowd  In  so  much  advertising,  and 
having  to  do  so  many  things  to  get  it  they,  by  the  very  bullc  and  weight, 
of  the  business,  have  weakened  their  force  as  an  advertising  medium. 

The  one  cent  newspapers  take  a  lot  of  cheap  advertising,  and  I  might 
say  fraudulent  copv,  which  otherwise  they  would  not  do  If  the  circulation 
Income  bore  a  proper  proportion  of  the  total  expenses.  This  paper  has  a 
larger  circulation  than  any  morning  or  evening  newspaper  In  the  south. 
Our  paper  is  sold  to  the  reader  for  15  cents  a  week ;  transient  reader  payB 
6^  a  copy  We  get  from  our  agents  from  8  to  10^  a  week.  We  get  about 
12i  cents  a  week  net  from  our  mail  subscribers.  We  sell  the  paper  to 
news  boys  In  tlie  city  for  2i  cents  a  copy.  If  our  paper  was  selling  for  10< 
a  week  to  the  reader  and  one  cent  a  copy  to  transients,  we  would  not  have 
more  circulation.  Everybody  In  our  territory  who  reads  at  all  takes  the 
paper  The  small  profit  that  we  make  out  of  the  white  paper,  enables  us 
to  print  a  big  paper  and  to  buy  an  enormous  amount  of  news.  The  news 
keeps  up  the  circulation.    The  subscriber  does  not  quarrel  at  the  price. 

he  gets  value  received.  ^  „  ^^^     ^        .      ,  ^.  t  *- 

Last  month  our  white  paper  bill  was  $18,000.    Our  circulation  receipts 

were  around  $26,000.     If  the  publishers  will  make  up  their  minds  to  sell 

their  paper  at  a  profit,  or  at  cost,  matters  will  quickly  be  adjusted. 

The  Washington  Star,  whose  letter  was  sent  out  to  members  by  the  American 

Newspaper  Publishers  Association,  wrote  as  follows: 

We  are  in  receipt  of  your  letter  of  October  14th  addressed  to  the  Editor 
of  The  Star  In  regard  to  the  news-print  paper  situation.  You  ask  for  our 
cooperation,  which  we  are  glad  to  give,  in  regard  to  reducing  the  consump- 

tlon  of  paper.  „  -      ^».  ^i.    *  a 

You  may  be  interested  In  the  comparative  figures  for  the  month  of  Sep- 
tember 1915  and  1916: 


Amount  of  paper  actually  used tons. 

Total  volume  of  advertising columns. 

Volume  of  reading  matter  (daily) do..., 

Volume  of  reading  matter  (Sunday) do... 

Volume  of  reading  matter  (total) do... 

Total  circulation  (daily) copies. 

Betums  and  adjustments  (daily) do... 

Total  circulation  (Sunday) ^^^^ 

Returns  and  adjustments  (Sunday) do-- 


September. 


1915 


416 

S,836 

1,950 

1,027 

2,977 

1,887,923 

31,907 

220,524 

S,719 


1916 


406 

8,078 

1,629 

766 

2,386 

1,950,467 

6,139 

227,637 

966 


In  the  Sunday  Issue  we  have  greatly  retluced  the  amount  of  reading  mat- 
ter eliminating  entirely  many  features  and  reducing  the  space  occupied  by 
manv  others.  Besides  this.  In  both  the  dally  and  Sunday  Issues  we  have. 
bv  reducing  the  news  heads  and  careful  editing  of  news  stories  reduced  the 
amount  of  space  now  being  used  for  reading  matter  nearly  20%. 

From  the  circulation  we  have  cut  off  all  returns,  and  eliminated  waste  In 
everv  way  possible.  W^e  have  constantly  been  studying  every  practical 
means  of  reducing  the  consumption  and  economizing  space,  but  up  to  this 
time  have  not  limited  the  advertising  nor  cut  the  reading  matter  to  a  point 
where  we  feel  that  we  have  injured  the  value  of  the  paper  to  the  reader. 

If  the  news  print  situation  is  actually  as  It  has  been  stated  and  the  con- 
gumption  continues  to  exceed  the  production,  there  Is  one  of  two  things 
left  for  the  publisher  to  do  to  reduce  the  consumption.  One  is  to  increase 
the  nrice  at  which  the  paper  Is  sold  to  the  public  or  the  alternative,  to  In- 
crease the  rate  which  is  charged  the  advertiser  to  a  point  where  the  adver- 
tising volume  will  be  reduced. 


EXHIBITS. 


147 


Nineteen  papers  having  circulations  of  over  25,000  and  under  50,000  answered 
the  commission's  letter.  Sixteen  of  these  had  reduced  or  were  trying  to  reduce 
their  consumption  of  news-print  paper.  One  of  this  group,  after  reciting  Its  very 
effective  economies,  says : 

I  am  of  the  opinion  that  the  reason  more  publishers  have  not  put  Into 
effect  a  system  to  eliminate  all  waste  and  to  economize  on  news  print  Is 
because  very  few  have  felt  the  scarcity,  or  been  affected  by  the  advance  In 
price. 

Another  says,  however,  that  though  fully  protected  by  contract  till  December 

31,  1917,  it  has  cut  down  its  consumption  heavily  and  would  be  willing  to  cut 

the   Sunday   paper   still   further   If   competitors   would   do   likewise,   but — "  I 

know     *     ♦     *     at    least    one    of   our   competitors   will    not    agree    to    this." 

Another  says  that  the  proper  way  to  get  at  this  Is  an  absolute  agreement  by 

all  the  newspapers.    Another  urges  selling  price  commensurate  with  paper  cost 

and  prohibition  of  mailing  Sunday  papers  on  Friday   night.     One  publisher 

writes  as  follows: 

The  fact  that  a  number  of  the  larger  newspapers  own  or  control  the 
paper  mills  that  supply  them,  and  will  not  cooperate,  makes  it  very  diffi- 
cult for  other  newspapers  to  economize  as  they  would  like  to. 

Of  30  papers  having  circulation  of  over  10,000  and  under  25,000,  there  were 
24  that  had  reduced,  or  were  about  to  reduce  their  size.  One  publisher  thought 
that  the  remedy  lay  In  refusal  of  second-class  mail  privileges  under  certain 
conditions.  Attention  was  called  by  another  to  the  fact  that  many  publishers 
"  are  getting  their  news-print  supply  under  contracts  that  allow  them  to  do  as 
they  choose."  One  said:  "Large  Sunday  circulations  are  confined  wholly  to 
the  metropolitan  papers,  and  It  Is  to  them  that  we  must  look  for  large  savings 
of  stock."  The  same  point  is  made  by  six  others.  Of  these  one  wrote  as 
follows : 

The  publisher,  who  has  been  more  than  forty  years  In  the  newspaper 
business,  believes  that  a  very  great  part  of  the  shortage  in  news  print  at 
the  present  time  Is  due  to  extravagance  in  use,  especially  by  the  huge  metro- 
politan Sunday  newspapers,  who  have  piled  feature  upon  feature  until  the 
bulk  of  their  issues  have  gone  beyond  all  reason  and  beyond  the  actual 
demand  of  the  reading  public ;  In  fact,  he  has  been  long  convinced  that  the 
people  would  welcome  smaller  newspapers  generally.  The  only  suggestion 
that  I  can  offer  regarding  practical  ways  of  making  your  proposal  effective, 
is  to  bear  strongly  In  your  urgings  upon  the  large  newspapers  in  the  great 
cities.  Unless  they  show  disposition  toward  some  unselfish  action,  there 
can  be  no  question  that  the  smaller  newspapers  of  the  country  will  be  com- 
I)elled  to  carry  the  burden  of  this  abnormal  situation. 

The  publisher  of  a  Baltimore  paper  expressed  his  view  on  the  same  subject 

as  follows: 

Take  Baltimore  English  language  papers  as  an  example.  There  are  two 
morning  papers,  three  afternoon  papers.  These  5  daily  papers  put  out 
every  day  from  14  to  30  pages  each.  There  are  three  Sunday  papers, 
putting  out  from  32  to  70  or  more  pages  each.  If  these  publications  would 
cut  down  but  two  pages  dally  per  paper  the  saving,  based  on  given  circu- 
lation would  amount  to  the  sum  of  over  32  tons  per  week — enough  to  run 
a  dozen  small  papers. 

Another  publisher  who  made  the  same  point  prefaced  it  with  an  Interesting 
account  of  his  own  economies  as  follows : 

We  have  furthermore  reduced  our  magazine  section,  first  from  12  pages 
to  10  and  now  to  8  pages.  The  interesting  part  about  this  reduction  on 
our  part  Is  that  we  have  been  able  to  effect  it  without  materially  injuring 
the  standard  or  quality  of  our  paper  and  without  sacrificing  any  of  our 
essentially  valuable  features.  We  have  accomplished  it  by  closer  and  more 
discriminating  editorship,  with  the  definite  purpose  in  view  of  making  one 


;<B^T''P"'  ■■ 


fiUMawb 


^'•r 


148  REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 

word  count  for  two  and  moderating  the  typographical  display  of  all  matter. 

We  are  very  much  pleased  with  the  results  of  our  efforts  thus  far  aud 
feel  confident  that  they  can  be  carried  still  further. 

However,  we  want  to  say  to  you  frankly  that  unless  the  publishers  of 
the  larger  newspapers  can  be  made  to  see  the  wisdom  of  this  policy  and 
put  it  Into  effect,  the  general  result  is  not  going  to  be  sufficient  to  relieve 
the  situation.  The  big  publishers,  with  keen  and  enterprising  competition 
to  meet,  hesitate  to  take  the  initiative,  and  any  movement  in  the  desired 
direction  is  left  to  the  smaller  newspapers  in  more  or  less  noncompetitive 
cities.  The  decrease  in  tonnage,  therefore,  is  relatively  small  when  com- 
pared to  the  total,  because  as  you  know  five  or  six  of  the  larger  cities  will 
use  a  greater  tonnage  than  practically  all  of  the  smaller  cities  combined. 

A  Michigan  paper  stated  that  the  publishers  of  that  State  had  already  met 
to  work  out  plans  to  economize  paper. 

Only  19  papers  having  circulations  of  over  5,000  and  under  10,000  responded 
to  the  Commission's  letter.  Of  these  16  were  already  trying  to  reduce  their 
consumption.  One  business  manager  in  this  group  made  the  point  that  If  the 
metropolitan  papers  would  cut  down  their  size,  the  smaller  papers  would  at 
once  follow  their  example.    He  also  suggested  the  suspension  of  all  papers  for 

one  day. 

Of  the  21  papers  having  circulations  under  5,000  which  replied,  13  were 
using  less  paper  than  formerly.  Several  of  the.se  papers  urged  the  great  Im- 
portance of  economies  by  the  metropolitan  dallies. 


Exhibit  3. 
tabiff  duties  on  pmnting  paper. 

Act  of  March  S,  188S,  Schedule  M: 

Printing  paper,  unsized,  used  for  books  and  newspapers  exclusively,  15 
per  cent  ad  valorem ;  sized  or  glued,  20  per  cent  ad  valorem. 
Act  0/  October  1,  1890  (McKinley  Law),  Schedule  M,  paragraphs  W  to  W: 

Printing  paper  unsized,  suitable  only  for  books  and  newspapers,  15  per 
cent  ad  valorem.  Printing  paper  sized  or  glued,  suitable  only  for  books 
and  newspapers,  20  per  cent  ad  valorem. 

Act  of  August  21  y  1894  {WUaonrOorman  Law),  Schedule  M,  paragraph  S06: 
Printing  paper,  unsized,  sized  or  glued,  suitable  only  for  books  and  news- 
papers, 15  per  cent  ad  valorem. 

Act  of  July  24,  1897  (Dingley  Law),  Schedule  M,  paragraph  S96: 

Printing  paper,  unsized,  sized  or  glued,  suitable  for  books  and  news- 
Daners  valued  at  not  above  2  cents  per  pound,  three-tenths  of  one  cent  per 
Dound  •  valued  above  2  cents  and  not  above  2i  cents  per  pound,  four-tenths 
of  one' cent  per  pound;  valued  above  2i  cents  per  pound  and  not  above  3 
cents  per  pound,  five-tenths  of  one  cent  per  pound;  valued  above  3  cents 
and  not  above  4  cents  per  pound,  six-tenths  of  one  cent  per  pound ;  valued 
above  4  cents  and  not  above  5  cents  per  pound,  eight-tenths  of  one  cent  per 
Dound-  valued  above  5  cents  per  pound,  15  per  centum  ad  valorem: 
Provided,  That  if  any  country  or  dependency  shall  impose  an  export  duty 
uDon  DUlp  wood  exported  to  the  United  States,  there  shall  be  imposed 
upon  printing  paper  when  imported  from  such  country  or  dependency, 
an  additional  duty  of  one-tenth  of  one  cent  per  pound  for  each  dollar  of 
export  duty  per  cord  so  Imposed,  and  proportionately  for  fractions  of  a 
dollar  of  such  export  duty. 

Act  of  August  5,  1909  { Payne- Aldrich  Law),  Schedule  M,  paragraph  409: 
Printing  paper    ♦    *    *,  unsized,  sized,  or  glued,  suitable  for  the  print- 
ing of  books  and  newspapers,  but  not  for  covers  or  bindings,  not  specially 
provided  for  in  this  section,  valued  at  not  above  two  and  one-fourth  cents 


EXHIBITS. 


149 


per  pound,  three-sixteenths  of  one  cent  per  pound ;  valued  above  two  and 
one-fourth  cents  and  not  above  two  and  one-half  cents  per  pound,  three- 
tenths  of  one  cent  per  pound ;  valued  above  tw^o  and  one-half  cents  per 
pound  and  not  above  four  cents  per  pound,  five-tenths  of  one  cent  per 
pound ;  valued  above  four  cents  and  not  above  five  cents  per  pound,  eight- 
tenths  of  one  cent  per  pound ;  valued  above  five  cents  per  pound,  fifteen 
per  centum  ad  valorem :  Provided,  however.  That  If  any  country,  depend- 
ency, province,  or  other  subdivision  of  government  shall  forbid  or  restrict 
In  any  way  the  exportation  of  (whether  by  law,  order,  regulation,  con- 
tractural  relation,  or  otherwise,  directly  or  indirectly)  or  impose  any 
export  duty,  export  license  fee,  or  other  export  charge  of  any  kind  what- 
soever *  *  *  upon  printing  paper,  wood  pulp,  or  wood  for  use  in  the 
manufacture  of  wood  pulp,  there  shall  be  imposed  upon  printing  paper 
when  imported  either  directly  or  indirectly  from  such  countrj%  dependency, 
province,  or  other  subdivision  of  government,  an  additional  duty  of  one- 
tenth  of  one  cent  per  pound  vi^hen  valued  at  three  cents  per  pound,  or  less, 
and  in  addition  thereto  the  amount  of  such  export  duty  or  other  export 
charge  imposed  by  such  country,  dependency,  province,  or  other  subdi- 
vision of  government,  upon  printing  paper,  wood  pulp,  or  wood  for  use 
in  the  manufacture  of  wood  pulp. 

Act  of  July  26,  1911  {Canadian  Reciprocity  Act),  Section  2:         ■  ■ 

Pulp  of  wood  mechanically  ground ;  pulp  of  wood,  chemical  bleached, 
or  unbleached ;  news  print  paper,  and  other  paper,  and  paper  board,  manu- 
factured from  mechanical  wood  pulp,  or  from  chemical  wood  pulp,  or  of 
which  such  pulp  is  the  component  material  of  chief  value,  colored  in  the 
pulp,  or  not  colored,  and  valued  at  not  more  than  4  cents  per  pound,  not 
including  printed  or  decorated  wall  paper,  being  the  products  of  Canada, 
when  Imported  therefrom  directly  into  the  United  States,  shall  be  admitted 
free  of  duty,  on  the  condition  precedent  that  no  export  duty,  export  license 
fee,  or  other  export  charge  of  any  kind  whatsoever  (whether  in  the  form  of 
additional  charge  or  license  fee  or  otherwise),  or  any  prohibition  or  restric- 
tion in  any  way  of  the  exportation  (whether  by  law,  order,  regulation, 
contractual  relation,  or  otherwise,  directly  or  indirectly),  shall  have  been 
Imposed  upon  such  paper,  board,  or  wood  pulp,  or  the  wood  used  in  the 
manufacture  of  such  paper,  board,  or  wood  pulp,  or  the  wood  pulp  used 
in  the  manufacture  of  such  paper  or  board. 

Act  of  October  S,  191S  (Underwood  Law),  Schedule  M,  paragraph  S22: 

Printing  paper  (other  than  paper  commercially  known  as  handmade  or 
machine  handmade  paper,  japan  paper,  and  imitation  japan  paper  by  what- 
ever name  known),  unsized,  sized,  or  glued,  suitable  for  the  printing  of 
books  and  newspapers,  but  not  for  covers  or  bindings,  not  specially  provided 
for  in  this  section,  valued  above  2^  cents  per  pound,  12  per  centum  ad 
valorem :  Provided,  however.  That  if  any  country,  dependency,  province,  or 
other  subdivision  of  government  shall  impose  any  export  duty,  export 
license  fee,  or  other  charge  of  any  kind  whatsoever  (whether  in  the  form 
of  additional  charge  or  license  fee  or  otherwise)  upon  printing  paper,  wood 
pulp,  or  wood  for  use  in  the  manufacture  of  wood  pulp,  there  shall  be 
imposed  upon  printing  paper,  valued  above  2i  cents  per  pound,  when  im- 
ported either  directly  or  indirectly  from  such  country,  dependency,  province, 
or  other  subdivision  of  government,  an  additional  duty  equal  to  the  amount 
of  the  highest  export  duty  or  other  export  charge  imposed  by  such  country, 
dependency,  province,  or  other  subdivision  of  government,  upon  either  print- 
ing paper,  or  upon  an  amount  of  wood  pulp,  or  wood  for  use  in  the  manu- 
facture of  wood  pulp  necessary  to  manufacture  such  printing  paper. 

Free  List,  paragraph  567: 

Printing  paper  (other  than  paper  commercially  known  as  handmade  or 
machine  handmade  paper,  japan  paper,  and  imitation  japan  paper  by 
whatever  name  known),  unsized,  sized,  or  glued,  suitable  for  the  printing 
of  books  and  newspapers,  but  not  for  covers  or  bindings,  not  specially 
provided  for  in  this  section,  valued  at  not  above  2i  cents  per  pound, 
decalcomanla  paper  not  printed. 

Act  of  September  8,  1916,  section  600,  paragraph  S22: 

Printing  paper  (other  than  paper  commercially  known  as  hand  made  or 
machine  hand  made  paper,  japan  paper,  and  imitation  japan  paper  by 


I 


it 


.;  f  :, 


I 


!-! 


150  REPOBT  ON   NEWS-PBINT  PAPER  INDUSTEY. 

whatever  name  known),  unsized,  sized,  or  glued,  suitable  for  the  printing 
TfS  and  newspapers,  but  not  for  covers  or  bindings,  not  specially  pro- 
vWe^for  in  this  s^^^^  Valued  above  5  cents  per  pound,  twelve  per  centum 
ad  valorem:  Proi^ded,  however.  That  if  any  country,  dependency  province 
or  other  subdivision  of  government  shall  impose  any  export  duty,  export 
license  fee,  or  other  charge  of  any  kind  whatsoever  (whether  In  Oie  form 
of  additional  charge  or  license  fee  or  otherwise)  upon  printing  Paper.  woc^ 
DulD  or  wood  for  use  in  the  manufacture  of  wood  pulp,  there  shall  be 
imposed  upon  printing  paper,  valued  above  5  cents  per  pound,  when  im- 
Dorted  directly  or  indirectly  from  such  country,  dependency,  province,  or 
other  subdivision  of  government,  an  additional  duty  equal  to  the  amount 
of  the  highest  export  duty  or  other  export  charge  Imposed  by  such  country, 
dependency,  province,  or  other  subdivision  of  government  upon  either 
nrinting  paper  or  upon  an  amount  of  wood  pulp,  or  wood  for  use  In  the 
manufacture  of  wood  pulp  necessary  to  manufacture  such  printing  paper. 

Free  List,  paragraph  567: 

Printing  paper  (other  than  paper  commercially  known  as  hand  made  or 
machine  hand  made  paper,  japan  paper,  and  Imitation  japan  paper  by 
whatever  name  known),  unsized,  sized,  or  glued,  suitable  for  the  printing 
of  books  and  newspapers,  but  not  for  covers  or  bindings,  not .  specially 
provided  for  In  this  section,  valued  at  not  above  5  cents  per  pound, 
decalcomania  paper  not  printed. 


.Exhibit  4. 

TABIFF  DUTIES  ON  WOOD  PULP. 

Act  of  188S,  Schedule  M: 

A  duty  of  10  per  cent  ad  valorem  was  provided  upon  pulp,  dried,  for  paper 

makers*  use. 
Act  of  1890,  Schedule  M,  paragraph  hU: 

Mechanically  ground  wood  pulp,  $2.50  per  ton,  dry  weight ;  chemical  wood 
pulp  unbleached,  $6.00  per  ton,  dry  weight;  bleached,  $7.00  per  ton,  dry 

weight. 

Act  of  189k,  Schedule  M,  paragraph  SOS: 

Mechanically  ground  wood  pulp  and  chemical  wood  pulp  unbleached  or 
bleached,  dutiable  at  the  rate  of  10  per  cent  ad  valorem. 

Act  of  1897  (Dingley  Law),  Schedule  M,  paragraph  S9S: 

Mechanically  ground  wood  pulp,  one-twelfth  of  one  cent  per  pound,  dry 
weight;  chemical  wood  pulp,  unbleached,  one-sixth  of  one  cent  Per  POund, 
dry  weight ;  bleached,  one-fourth  of  one  cent  per  pound,  dry  weight  Pro- 
vided, That  If  any  country  or  dependency  shall  Impose  an  export  duty  on 
pu^p  wood  exported  to  the  United  States,  the  amount  of  such  duty  shal  be 
added,  as  an  additional  duty,  to  the  duties  herein  Imposed  upon  wood  pulp, 
when  imported  from  such  country  or  dependency. 

Act  of  1909  (Payne  Laio) ;  Schedule  M,  paragraph  4O6: 

Mechanically  ground  wood  pulp,  one-twelfth  of  one  cent  per  Pound  dry 
w^sht'  Provided,  however,  That  mechanically  ground  wood  pulp  shall  be 
admitted  free  of  duty  from  any  country,  dependency,  province,  or  other 
suMl vision  of  government  (being  the  product  thereof)  which  does  not 
forbid  or  restrirt  in  any  way  the  exportation  of  (whether  by  law.  order, 
r«L^1^ntraJ?ua/r^^  or  STherwise.  directly  or  indirectly)    or 

Imnose  anv  export  duty,  export  license  fee.  or  other  export  charge  of  any 
LTnTwhatLlver,  either  directly  o^  (whether  In  the  form  of  addi- 

tional charge  or  license  fee  or  otherwise)  upon  printing  paper,  mechanically 
ground  wood  pulp,  or  wood  for  use  In  the  manufacture  of  wood  pulp :  Pro- 
vided further.  That  If  any  country,  dependency,  province,  or  other  subdivision 
^f  government,  shall  impose  an  export  duty  or  other  export  charge  of  any 
Snd  whatsoever,  either  directly  or  indirectly  •  •  ♦  upon  printing  paper 
mechanically  ground  wood  pulp,  or  wood  for  use  in  the  manufacture  of 
w^pXthf  amount  of  such  export  duty  or  other  export  charge  shall 
STdded  as  an  additinal  duty  to  the  duty  herein  imposed  upon  mechan- 


I 


EXHIBITS. 


151 


ically  ground  wood  pulp  when  imported  directly  or  indirectly  from  such 
country,  dependency,  province,  or  other  subdivision  of  Government.  Chem- 
ical wood  pulp,  unbleached,  one-sixth  of  one  cent  per  pound,  dry  weight; 
bleached,  one-fourth  of  one  cent  per  pound,  dry  weight:  Provided,  That 
if  any  country,  dependency,  province,  or  other  subdivision  of  government 
shall  Impose  an  export  duty,  or  other  export  charge  of  any  kind  whatso- 
ever, either  directly  or  Indirectly  *  *  ♦  upon  printing  paper,  chemical 
wood  pulp,  or  wood  for  use  in  the  manufacture  of  wood  pulp,  the  amount 
of  such  export  duty,  or  other  export  charge,  shall  be  added  as  an  addi- 
tional duty  to  the  duties  herein  imposed  upon  chemical  wood  pulp  when  im- 
ported directly  or  indirectly  from  such  country,  dependency,  province,  or 
other  subdivision  of  government. 
For  provisions  of  the  Canadian  reciprocity  act  of  1911  as  to  wood  pulp,  see 

Exhibit  3. 
Act  of  October  2,  191S  {Undericood  Law) ;  free  list,  paragraph  649: 

Mechanically   ground   wood   pulp,   chemical   wood   pulp,   unbleached   or 
bleached,  and  rag  pulp. 

Exhibit  5. 
CONTBACT  FORMS  FOR  THE  SALE  OF  NEWS  PRINT. 

SPECIFICATIONS   OF   QUANTITY. 

There  have  heretofore  been  three  common  forms  of  quantity  specifications, 
which  were  substantially  as  follows: 

Maximum  and  minimum  provision. — That  the  vendor  agrees  to  sell  and  de- 
liver, and  the  vendee  agrees  to  purchase  and  receive  from  the  vendor,  all  the 
news-print  paper  required  In  printing  and  publishing  all  the  editions  of  the 
,  a  newspaper  published  In  the  city  of ,  not  exceeding  —  tons,  nor 

less  than  —  tons. 

Leeway  provision. — The  vendor  agrees  to  sell  and  furnish  to  the  vendee,  and 
the  vendee  hereby  agrees  to  purchase  and  take  from  the  vendor,  for  use  in  the 

publication  of  the ,  a  newspaper  published  in  the  city  of ,  —  tons 

of  news  print  per  year,  with  a  leeway  of  5  per  cent  over  or  under  in  quantity. 

Entire  supply  provision. — The  vendor  agrees  to  sell  and  furnish  to  the  ven- 
dee, and  the  vendee  hereby  agrees  to  purchase  and  take  from  the  vendor,  for 
use  in  the  publication  of  the  ,  a  newspaper  published  in  the  city  of 


-,  their  entire  supply,  estimated  at  —  tons,  during  the  period  from 


to  . 

The  inadequacy  of  provisions  like  those  above  has  been  repeatedly  demon- 
strated; under  them  both  the  manufacturer  and  publisher  are  left  in  un- 
certainty. 

If  publisher  desires  the  maximum  quantity  or  an  amount  substantially  In 
excess  of  the  approximately  estimated  tonnage,  the  manufacturer  may  have 
difficulty  in  meeting  his  obligations. 

If  the  publisher  desires  the  minimum  tonnage,  the  manufacturer  must  offer 
any  excess  he  has  provided  to  meet  the  contingency,  at  a  reduced  price  and 
thus  demoralize  the  open  market 

If  many  publishers  simultaneously  require  the  maximum  tonnage,  the  quan- 
tity available  for  purchase  in  open  market  is  reduced,  and  publishers  not  pro- 
tected by  contracts  bear  the  consequences. 

The  new  standard  contract  seeks  to  avoid  these  difficulties  by  having  the 
tonnage  specifically  stated,  which  the  manufacturer  shall  be  obliged  to  deliver, 
and  the  publisher  to  accept  and  pay  for,  to  be  ordered  and  delivered  in  definite 
and  equal  periodic  installments. 


(i 


I 


I! 


152 


REPORT  ON    NEWS-PRINT  PAPER   INDUSTRY. 


SPECIFICATIONS  OF  WEIGHT. 


Gross  weight  basis— F&yment  according  to  actual  weight  of  roll  as  delivered 
m  press  room  with  allowance  for  weight  of  core. 

Production  6o«i«.— Not  payment  according  to  pound  or  ton  as  above,  but 
upon  basis  of  so  many  pounds  making  a  thousand  8-page  sheets,  e.  g.,  114 
pounds  per  thousand  8-page  sheets. 

The  gross  weight  basis  has  been  the  one  In  general  use,  with  a  standard 
basis  of  weight  of  32  pounds  per  500  sheets  measuring  24  x  36.  It  is  ex- 
pressly provided  in  the  standard  contract  that  the  weight  is  to  be  determined 
without  reference  to  the  production  basis,  and  that  the  paper  is  to  be  run  as 
near  to  the  weight  as  practicable,  but  5  per  cent,  i.  e.,  1.6  pounds  on  32,  over 
or  under  the  nominal  weight  shall  be  considered  good  delivery. 

SPECIFICATION  OF  WIDTH. 

There  are  over  forty  variations  in  the  width  of  rolls,  though  usually  they 
run  from  74  Inches  full  width  to  62  or  63  inches,  and  then  in  fractions  of  an 
inch.  The  Standard  contract  proposes,  as  a  uniform  width,  66  inches,  49i 
Inches,  33  Inches,  subject  to  change  only  with  the  consent  of  the  manufacturer. 

PBICE. 

Generally  quoted  on  100-pound  basis. 

Terms  of  pai/men«.— Diversity  has  existed  In  the  terms  of  payment :  net  cash 
in  specified  days  from  date  of  invoice;  not  later  than  speciQed  date  of  succeed- 
ing month ;  30  days  from  arrival  of  cars  at  destination,  etc.,  are  common.  The 
standard  form  proposes  net  cash  30  days,  or  not  later  than  the  15th  of  the 
month  following  shipment. 

Fret^Ti^— Further  standardization  is  made  by  fixing  the  price  upon  n  mill 
basis  that  is,  f.  o.  b.  at  mill.  The  publisher  thus  stands  the  freight  charges 
or  is  given  an  allowance  therefor  In  the  price.  Under  this  arrangement.  It 
follows  that  the  purchaser  makes  his  claims  for  damaged  paper  against  the 
carrier,  unless  the  paper  was  defective  when  it  left  the  mill. 


STORAGE. 


The  result  Is 


The  standard  contract  does  not  contain  a  "  storage  clause." 
that  the  purchaser  must  provide  his  own  storage. 

BTANDABD    CONTRACT. 

A  new  standard  form  of  contract  to  cover  deliveries  in  1917  has  been  adopted 
by  most  of  the  news-print  manufacturers.  There  are  a  few  minor 'variations 
in  the  forms  used  by  some  of  the  manufacturers,  but  the  principal  provisions 
are  substantially  the  same.  A  copy  of  the  standard  contract  as  proposed  by 
the  News  Print  Manufacturers  Association  is  as  follows : 

STANDARD  FORM  OF  CONTRACT. 

In  CONSIDERATION  of  the  mutual  covenants  and  agreements  hereinafter 
set  out.  The  Standard  Paper  Company,  of  the  City  of  New  York,  State  of 
New  York,  hereinafter  called  the  seller,  agrees  to  sell  and  hereby  does 
sell  and  The  News  Publishing  Company  of  the  City  of  New  York,  State 
of  New  York  hereinafter  called  the  purchaser,  agrees  to  buy  and  pay  for, 
and  hereby  does  buy.  six  hundred  (600)  tons  of  roll  news  print  paper 
required  to  print  editions  of  "  The  Morning  News,"  a  newspaper  published 


EXHIBITS. 


153 


in  the  City  of  New  York,  New  York,  during  the  period  beginning  January 
1  1916  and  ending  December  31,  1916,  both  dates  inclusive,  to  be  ordered 
and  delivered  in  equal  monthly  installments  of  fifty  (50)  tons,  not  cumu- 
lative, subject  to  the  following  terms  and  conditions:      ^^    ^  ^  ,       ^     „„, 

1  This  contract,  together  with  the  trade  custojis  attached  hereto  and 
made  a  part  hereof,  is  complete  in  itself,  and  sets  forth  the  agreement  and 
conditions  between  the  parties  hereto,  and  it  may  not  be  assigned  by 
either  narty  except  by  consent  of  the  other. 

2  Specification.— A.  The  said  paper  shall  be  of  substantially  the  same 
average  Quality  as  sample  attached  to  this  agreement  and  of  approxi- 
mately the  following  basis  of  weight :  24  x  S6.  32/500,  without  reference  to 

production  basis.  ...        «„  .     .. 

B.  Widths  of  rolls  66  inches,  49i  inches,  33  inches.  „     ,     ,    v 

o  Price  — $2  68  per  one  hundred  pounds  actual  weight  of  rolls,  including 
paper  and  wrappers,  but  excluding  cores,  ON  CARS  AT  MILL.  Price  in- 
eludes  freight  allowance  of  18  cents  per  one  hundred  pounds.     Routing  is 

reserved  to  the  seller.*  ^  ^      j,  .       .  *.  !„<-«« 

4.  Terma— Net  cash  thirty  (30)  days  from  date  of  invoice,  or  not  later 
than  the  15th  day  of  the  month  for  all  paper  shipped  the  previous  month. 
Payments  shall  be  made  in Exchange. 

5.  Delivery.— The  paper  to  be  furnished  under  this  agreement  shall  be  tlie 
product  of with  mills  located  at . 

6  Contingencies.— In  case  the  seller  shall  be  unable  and  fall  at  any  time 
to  make  and  supply,  or  the  purchaser  shall  be  unab\e  and  fall  to  take  and 
use  said  paper  in  consequence  of  strikes,  fire,  explosion  lock-outs,  combina- 
tions of  workmen,  fiood,  drought,  embargoes,  war,  the  acts  of  God,  the  public 
enemy  or  any  cause  beyond  the  control  of  either  party  hereto,  the  seller 
shall  not  be  liable  to  the  purchaser  for  failure  to  supply  such  paper,  nor 
shall  the  purchaser  be  liable  to  the  seller  for  failure  to  take  such  paper 
during  the  period  of  the  disability. 

7  Cancellation.— It  the  purchaser  shall  fail  to  pay  any  amounts  when 
due  under  this  contract,  or  fail  to  make  settlements  as  provided  herein,  the 
SELLER  may,  after  ten  (10)  days  written  notice,  cancel  this  contract  aiid 
declare  the  obligations  of  the  purchaser  for  all  paper  furnished  hereunder 
due  forthwith,  notwithstanding  the  terms  hereof,  but  the  purchaser  shall 
remain  liable  to  the  seller  for  all  loss  and  damage  sustained  by  reason  of 
such  failure. 


» The  new  contract  forms  of  one  company  conteln  the  following  provisions  In  regard 

to  prices^     •      (b)   The  above  price  of net  per  one  hundred  pounds  F.  O.  B. 

Mill  to  be  adjusted  annually  proportionately  up  and  down  as  the  average  aggregate 

^-f  t^  fh»  mill  of  coal    wood  and  labor  for  each  one  hundred  pounds  of  paper 

manufactSred   by   the  ^Id   mill  vSrles  each   year,  during   the  life  of   the  contract. 

SSm  the  average  aggregate  cost  to  the  mill  of  coal,  wood  and  labor  for  each  one 

hu^dr^  vJxSdimllntacturea  by  the  mill  for  the  first  ten  months  of  the  calendar 

5eari916rthe  schedule  of  thSe  costs  for  1916  being  attached  heretoand  both  parties 

tlJeto  certifying  to  the  correctness  thereof.    The  basis  price  of  — net  mUl  being 

made  o?  the  basis  of  costs  for  the  first  ten  months  of  the  calendar  year  1916,  this 

Sill  be  °he  cost  schedule  on  which  adjustments  will  be  made  each  ^ea^      This  clause 

SUriatiL  will  also  apply  to  any  groundwood  or  sulphite  pulp  that  the  mill  may 

SiJo  f«  Kfr  niitR?dP    as  comoared  to  the  mill's  cost  schedule  through   the   mill's 

SS^illty  tS^manufactu?e  In  TtlSwu  plant.     Adjustment  to  be  made  by  payment  in 

Ssh  by  elth?r  s"df  to  the  other  on  February  15,  1918    for  the  preceding  year  of 

1917    and  a  like  adjustment  to  be  made  on  each  succeeding  February  15th  for  the 

irecedfne  year  following  during  the  life  of  this  contract. 

preceding  year  roi  ow    «      ,      ^^^^^  ^^  ^^^  ^^^^  that  the  price  for  paper  above  fixed 

i»  ^«,.^  o^*»«fiir  iPRR  than  the  orlce  the  Seller  can  obtain  therefor  If  It  limited  the 
V  o7  iS  ?ontracts  to  a  short  pl^^^^^^^  and  that  the  Seller  Is  willing  to  and  has 
sold  said  paper  for  said  loTp^^^  on  condition  that  the  Purchaser  shall  continue 
?nnnrrha<,eoaDer  at  the  above  price  for  the  full  term  of  this  contract,  the  Pur- 
rha??r  ag^es  In  caJe  of  Its  failure  to  take  and  pay  for  any  of  the  paper  Purchased 
wfnnHp^nr  in  cRse  the  Purchaser  cancels  this  contract,  to  pay  the  liquidated 
dlma?eshe?elnaftef  let  forth  for  its  breach  or  cancellation.  Said  liquidated  dam- 
2eS  fhlll  be  a  turn  equal  to  the  difference  between  the  price  of  the  PfPer  theretofore 

SS  W -H"X^of  %V^^1?oSf  ^ttS^frf\^^&l  tP  S'lpl^^ 
receiving^  the  same  quanty  op^  ^^jj^    ^^^  tt^e  price  of  the  paper 

contract. 


I 


<'. 


>, 


i 


154 


REPORT  ON    NEWS-PRINT  PAPER  INDUSTRY. 


This  agreement  Is  executed  in  duplicate  oriprinal  and  shall  be  governed 
bv  the  laws  of  the  place  of  the  legal  domicile  of  the  seller. 

Ex^utld  at  100  Broadway.  City.  County  and  State  of  New  York,  this  10th 

day  of  December.  1915.  Standard  Paper  Company,  sellee, 

By  John  Johnson,  President. 
The  News  Publishing  Company,  purchaser, 
By  John  Jones,  President. 


roll  news  print  paper  trade  customs. 
1    Tonnaac— Purchaser  shall  order  a  definite  tonnage  of  paper  to  be 
taken  ove?t^\e  contract  period  and  in  equal  monthly  installments  of  the 

'""TZTo}  S.-Pive  per  cent.    (5%)    over  or  under  the  contract 

''T^^^^^^fl^'7^  ^et^tTaTu.  contract  are  permanent 

"tlS:^.^^^^^^^^  PURCHASER  shall   ^urnish   to  t^^^ 

SETLER  by  the  15th  day  of  each  month  complete  specifications  for  the  ship- 

TVe%'l-¥lfe  w^iXt'^  paper  shall  be  gross  weight 

''t  telvZlofl-v7i:iry  point  is  on  board  cars  at  place  of  manu- 

^"fTerms.-Terms  net  cash  thirty  days  from  date  of  invoice  or  not  later 
than  the  15th  day  of  the  month  for  all  paper  shipperi  the  previous  month. 

8  Cores -Cores  shall  be  charged  to  the  purcha3ER  at  one  cent  per  inch 
if  riaoer  and  three  cents  per  Inch  If  iron,  and  shall  be  returned  promptly, 
freight  prepaid,  when  they  shall  be  credited  to  the  purchaser  at  invoice 

^^9%laim8.—A.  No  allowance  shall  be  made  for  waste,  damage  or  paper 
lef^  on  cores.      ^^^^^  ^^  ^^^^^^  applying  upon  any  shipment  of  paper 

made  under  a  contract,  the  seller  shall  be  notified  immediately,  but  no 
claim  shall  be  allowed  for  consequential  damage. 


Exhibit  6. 

CIRCULARS   SENT   OUT   BY   JOBBERS   IN   REGARD   TO   THE   HIGH 

PRICES  AND  SCARCITY  OF  PAPER. 

One  of  the  questions  in  the  schedule  sent  out  by  the  Commission  to  news- 
paper publishers  was  as  follows : 

State  reasons  given  you  by  seller  for  any  recent  increase  in  price  of 
news  print.    Give  full  particulars,  copies  of  correspondence,  etc. 
In  response,  many  of  the  publishers  sent  in  circular  letters  that  they  had 
received  from  jobbers.    A  number  of  these  letters  are  given  below. 

[No.  1.1 

Smith,  Dixon  Company, 
Division  of  the  Whitaker  Paper  Co., 

Baltimore,  January  17,  1916. 

Gentlemen  :  While  all  prices  are  "  subject  to  change  without  notice " 
this  phrase  is  taking  on  a  very  definite  meaning  in  these  days,  owing  to 
conditions  which  the  paper  manufacturers  of  this  country  are  facing- 
Certain  chemicals  used  in  making  paper,  have  been  bought  in  enormous 
quantities  by  the  manufacturers  of  high  explosives ;  importations  of  other 
?aw  materials  have  stopped.  The  cost  of  tbese  chemicals  have  advanc^ 
to  a  point  never  before  reached,  and  in  the  case  of  some  of  them,  there  is  no 
available  supply  at  any  price. 


EXHIBITS. 


155 


The  paper  mills  are  unable  to  contract  at  a  fixed  price  for  these  prod- 
ucts and  are  forced  to  purchase  as  their  needs  demand  at  ever  increasing 
prices.    This  accounts  for  the  unstable  paper  market.  ,        „*  ^„^ 

Unless  otherwise  instructed,  we  will  charge  all  of  your  orders  at  our 
lowest  current  price,  even  if  higher  than  you  have  paid  on  previous  ship- 
ments     If  we  are  forced  to  write  you  regarding  every  order  received 
waiting  for  your  authority  to  charge  at  a  higher  price,  the  chances  are  that 
the  nrice  will  be  still  higher  by  the  time  your  answer  reaches  us. 

Rest  assured  that  no  advantage  will  be  taken  of  the  conditions  we  are 
facing,  and  that  no  prices  will  be  raised  except  where  absolutely  necessary. 
'Yours,  very  truly,  ^^^^^^  ^^^^  Company  Div. 

[No.  2.] 
WHY   YOUR  papers   COST  YOU   MORE. 

Many  buyers  of  paper  are  wondering  if  conditions  justify  the  rapid 
advances  that  have  been  made,  and  will  be  made  as  long  as  the  market 
remains  in  the  present  unsettled  state. 

The  aiswer  to  these  questions  are  the  facts:  that  the  paper  manufac 
turerl  a?e  compelled  to  advance  prices,  because  of  the  high  costs  of  raw 
materials  oarticularly  of  chemicals  and  dyes.  ^  ^     xx. 

Thrtabirbelow  shows  the  normal  scale  of  prices,  as  compared  to  the 
prices  that  paper  manufacturers  are  now  paying  for  these  same  materials . 

Now  $3.75  to  $4.25  cwt 
"     13c.  ( and  unobtai  nable ) 
2ic. 

6.50  bbl. 
9c.  lb. 

20  to  30  c.  lb. 
3c. 

$20.  *• 

39c.  sq.  ft. 


Bleached  Sulphite 

Bleaching  Powder 

Soda  Ash 

Rosin 

Satin  White 

Casein 

Alum 

Aniline  Colors 

Fourdrinier  Wires 

Woolen  and  Cotton  Felts 

Thirds  and  Blues 

Lumber  (cases  and  frames) 


i< 


was  $2.65  cwt. 

li  c. 

65  c.  cwt. 

3.75  bbl. 

5c.  lb. 

6ic.  lb. 

Ic      " 

40c.    " 

29c.  sq.  ft. 
have  advanced  10% 
was  $1.35 

$13.25  M. 


u 
u 
«( 
w 
« 


M 


<t 


tt 

u 


2i  c. 
$18.50  M 


Furthermore  the  chemical  people  will  not  make  any  contracts  at  any 
Drfc^^  thkt  miUs  are  simply  buying  from  hand  to  mouth,  as  their  needs 
^^uiVrin  many  Instances  beiug  unable  to  obtain  certain  supplies  at  any 

^"^aI*  soon  as  conditions  are  normal,  that  is,  when  imports  can  be  again 
resumSora  larger  domestic  supply  developed,  prices  will  right  them- 

^^The  chemicals  used  by  paper  manufacturers  in  making  bleaching  powder, 
have  b^rbough^^^^^  during  the  past  few  months  by  the 

makers  of  high  explosives,  so  that  this  market  has  been  very  demoralized 
This  accountffor  the  shortage  of  supply,  and  the  very  high  prices  of  such 

*^^Thl'^higher  prices  now  prevailing  do  not  mean  exorbitant  profits  to  either 
thrmanufact^rer  or  the  paper  dealer.  It  is  a  difficult  thing  to  maintain 
even  usual  profits  above  the  constantly  rising  costs. 

Smith,  Dixon  Company  Drv., 

Baltimore,  Md. 

February,  1916. 

[No.  3.1 
West-Cullum  Paper  Company, 
Wholesale  Paper  for  Printers, 

Dallas,  Tex.,  February  24,  1916. 

To  THE  Trade:  ,       .^.    ,,  ,. 

You  have  no  doubt,  been  keeping  in  pretty  close  touch  with  the  condi- 
tion of  the  paper  industry,  but  thinking  that  many  of  our  customers  do  not 
ftiUv  Lnrec^^fthe  seri^^^  of  the  situation,  we  have  printed  copies  of 

i^L TetterTsuch  a^^       are  receiving  daily,  as  we  believe  the  information 


)\ 


156  REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 

will  be  worth  something  to  the  trade.  You  can  readily  see  that  it  is  im- 
possible for  any  dealer  to  issue  a  price  list  which  would  be  good  even  for  a 
day.  and  that  it  will  be  necessary  for  us  to  bill  orders  at  prices  prevailing 
from  day  to  day.  We  have  access  to  the  largest  stocks  of  paper  in  the 
United  States  and  it  is  not  necessary  for  us  to  wait  on  mill  orders  to  re- 
plenish our  stock,  which  in  many  instances,  would  require  three  to  four 
months'  time.  We  believe  we  are  in  the  best  possible  position  to  take  care 
of  the  Texas  trade,  especially  on  small  orders  which  are  for  immediate  use, 
and  feel  that  if  you  will  entrust  us  with  your  orders,  you  will  get  quick 
service  and  the  benefit  of  the  best  price  to  be  had. 

Very  respectfully,  ^  „  ^ 

West-Cuixum  Paper  Company. 

PuL^SE  note:  We  think  It  will  be  worth  your  time  to  read  carefully  the 
enclosed  copies,  and  to  give  same  as  much  publicity  as  possible,  in  order  to 
prepare  your  customers  for  the  advance  in  prices,  which  you  will  be  com- 
pelled to  make. 

Saint  Louis,  February  16,  1916. 
West-Cullum  Papee  Ck).,  Dallas,  Texas. 

Gentlemen  :  In  order  to  keep  you  posted  on  the  paper  situation,  and  in 
order  that  you  may  be  thoroughly  alive  to  the  seriousness  of  the  present 
market  conditions  we  give  you  this  letter.  Conditions  are  growing  worse 
daily.  Many  mills  are  facing  the  necessity  of  shutting  down  on  account 
of  lack  of  materials  and  the  cost  of  every  product  which  is  used  in  the 
manufacture  of  paper  has  increased  in  price  from  25%  to  2000%. 

In  order  that  our  customers  may  know  the  reasons  for  the  existing  con- 
ditions, and  so  they  will  appreciate  the  gravity  of  the  situation,  we  give 
them  the  facts  and  figures.    Here  are  the  causes  for  the  advancing  prices : 

FiBST.  Increased  cost  of  all  materials  used  in  making  paper. 


Rags 

Bleached  Sulphite 

Soda  Pulp 

Alum 

Rosin 

Wire  Screen 

Felts 

Bleaching  Powder 


-Colors 


Satin  White 
Blanc  Fix 
Casein 
Soda  Ash 


100%  Increase 

formerly  $45  ton,  now  $110 

30%  to  50%  increase 

300%  to  400%  increase 

40%  increase 

25%  to  50%  increase 

50%  increase 

1000%  increase  and  none  to  be  had 

500%  to  2500%  increase  and  up 

25%  to  50%  increase 

100%  to  150%  increase 

250%  increase 

300%  increase 


Rags  have  advanced  in  price,  both  on  account  of  short  supply  and  the 
demand.  Munition  makers  are  using  tremendous  quantities  of  cotton  rags 
to  make  explosives.  Formerly  we  imported  vast  quantities  of  rags  from 
Europe  This  is  all  shut  off.  Russia  uses  lineii  almost  as  universally  as 
we  do  cotton  and  a  large  proportion  of  our  supply  comes  from  there. 
None  has  been  coming  in  for  months  and  stocks  are  exhausted. 

Chlorine  (bleach)  has  advanced  from  lie.  a  lb.  to  about  15c.  a  lb.  on 
account  of  the  stopping  of  supply  from  Europe  and  the  domestic  makers 
are  busy  with  chlorine  gas  and  chloroform. 

Second.  Decreased  supply.    You  know  the  situation  on  colors. 

Other  paper  ingredients  are  similarly  affected  by  demand  and  supply. 
Before  the  war,  Germany  supplied  a  large  part  of  the  paper  for  the  world, 
except  to  the  United  States,  and  even  this  country  bought  considerable  paper 
and  lots  of  pulp.  Sweden  also  sold  us  large  amounts  of  pulp,  newspaper 
and  wrapping— both  countries  making  paper  and  pulp  from  Russian  Wood. 

Germany,  of  course,  was  shut  out  at  once,  but  general  business  was  so 
paralyzed  all  over  the  world  that  existing  stocks  of  paper  lasted  for 
months  and  the  loss  of  the  German  supply  was  not  felt,  while  Sweden 
could  continue  to  supply  her  share.  After  about  one  year,  however, 
Swedish  mills  began  to  run  out  of  wood,  as  on  account  of  the  conditions, 
they  could  not  secure  the  usual  amount  from  Russia  so  that  cut  off  the 
Swedish  supply. 


EXHIBITS. 


157 


Then  European  mills,  formerly  dependent  on  Germany  and  Sweden  for 
pulp,  turned  to  Canada,  taking  all  the  surplus  Canadian  pulp  which  for- 
merly came  to  the  United  States.  This  caused  a  further  shortage.  To 
this  trouble  was  added  the  high  prices  and  scarcity  of  all  chemicals  and 
<lves,  of  which  Germany  formerly  supplied  us  with  the  greater  part.  All 
these  conditions  making  it  increasingly  difficult  for  the  paper  makers  to 
secure  supplies. 

Thibd.  Increases!  demand. 

Just  at  the  time  that  paper  became  scarce,  there  came  a  tremendous 
increase  in  business  both  here  and  in  England  and  South  America,  creat- 
ing an  enormous  and  unheard  of  demand  for  paper.  Stocks  everywhere 
were  short  and  there  came  a  tremendous  demand.  Right  on  top  of  the 
shortage,  South  America,  Asia,  Australia  and  even  some  of  the  European 
countries  began  to  buy  paper  in  America,  and  to  offer  big  premiums  over 

^^The^comblned  demand  Is  for  several  times  as  much  paper  as  American 
mills  can  make  and  the  available  supply  of  raw  stock  is  very  short  and 
high  in  price,  so  it  is  no  wonder  prices  are  jumping.  _^    ^     ,^  ^  , 

There  is  no  precedent  for  this  present  situation.  We  don't  know  where 
prices  will  go,  but  would  not  be  surprised  to  see  prices  advance  as  much 

as  100% 

If  your  customers  think  the  advances  In  paper  are  not  reasonable,  call 
their  attention  to  the  much  greater  increase  in  the  price  of  all  metals, 
electrical  goods,  all  chemicals,  woolen  goods,  and  many  others  which  have 
advanced  very  much  more  than  paper. 

Be  exceedingly  careful  and  warn  all  your  salesmen  not  to  take  any 
orders  for  paper  unless  you  are  sure  they  can  be  shipped. 

Febbuaby  16,  1916. 

West-Ctjllum  Papeb  Co., 

Dallas,  Texas. 

Gentlemen  :  To  show  my  appreciation  of  the  business  you  have  given 
me  in  the  past,  I  feel  it  is  my  duty  to  advise  you  of  the  seriousness  of  the 
situation  with  reference  to  paper,  and  give  you  such  information  as  I  ^ 
can  as  to  what  you  may  expect  in  regard  to  price,  and  some  of  the  reasous 
for  the  unprecedented  advances  which  are  already  in  effect  and  still 
greater  advances  which  we  may  expect  in  the  near  future. 

The  paper  trade  is  now  facing  an  absolute  famine  and  many  mills  will 
be  forced  to  shut  down  on  account  of  being  unable  to  obtain  rags,  pulp, 
and  chemicals.  The  largest  mills  in  the  country  are  refusing  to  make 
prices  except  at  such  prices  as  they  may  name  upon  receipt  of  the  order 
at  their  mills,  same  being  subject  to  their  ability  to  make  the  paper  at  all. 
They  will  take  no  contracts  nor  orders  for  future  delivery.    The  situation 

^®  W?  Mv^e^one  letter  from  a  big  mill,  stating  they  view  the  situation  with 
the  greatest  alarm  and  believe  we  are  going  to  see  the  most  vicious 
market  ever  known.    The  largest  aggregation  of  mills  In  the  United  States 

writes  us  as  follows:  ^,  ,       , 

"Now  In  regard  to  entering  future  orders  at  the  present  prices,  we 
cannot  guarantee  them  at  all,  and  prices  are  subject  to  acceptance  at  the 
Drevalling  prices  on  the  day  that  the  orders  are  received  here.  We  know 
this  is  a  terrible  state  of  affairs  and  leaves  you  in  a  very  unsatisfactory 
position,  but  you  are  not  nearly  as  bad  off  as  we  are,  because  even  where 
we  have  contracts  for  fitock  and  material  we  cannot  get  them,  and  when- 
ever we  ask  for  any  material,  prices  are  quoted  us  subject  to  prior  sale 
and  advance  without  notice,  and  in  many  instances  where  we  have  received 
Quotations  and  wired  acceptance  of  them  we  have  been  notified  the  stock 
had  all  been  sold,  so  you  can  see  we  cannot  guarantee  our  prices,  even  from 

*^°Now^  the*?act  Is,  there  is  a  tremendous  demand  for  paper,  a  shortage 
of  materials  with  high  prices  and  a  wild  scramble  to  secure  such  materials 
2s  Tre  yet  to  be  obtained.  Many  dealers  will  be  out  of  paper  unless  some- 
Sing  unforeseen  occurs  and  every  Indication  is  that  prices  will  continue 
to  advance  rapidly  and  that  paper  will  get  scarcer  until  an  actual  famine 
exists  and  that  many  buyers  will  be  unable  to  secure  their  necessary 

supply. 


A^ 


W^^ 


■If 


M 


158 


REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 


We  will  put  forth  every  effort  to  secure  enough  paper  to  keep  our  old 
cnstomlrs  supplied.     We  don't  want  to  sell  any  one  buying  large  amounts, 
b^t  ex^ct  to  ip^^      our  stock  among  our  regular  customers  to  keep  them 
suppuK  far  as^  P^^^^          Therefore,  we   are  not  making  a?y   lower 
pXs  for  large  quantities  than  we  could  for  case  lots.    Our  object  is  ta 
tek?  care  of  our  regular  trade  and  not  try  to  take  advantage  of  tne 
situation  to  get  new  customers,  because  the  mills   are  no^y   in   a  pane 
becauTthey  fannot  get  material  to  fill  orders  and  are  lying  down  on  their 
coS?aL     We  think  we  are  in  better  position  to  take  care  of  our  cus- 
tomers thanXmaJ^         of  our  competitors  on  account  of  the  large  stocks 
we  always  carry  and  believe  we  will  be  in  a  better  ,>osition  to  fill  orders 
Tan  many  of  our  competitors  for  the  reason  that  we  have  tied  up  with 
miUs  that  are  best  fixed  to  run  during  this  famine.     By  our  PoHcy  we 
hope  to  have  a  lot  of  loyal  friends  among  our  customers  for  tj^e  reason  that 
we  have  taken  care  of  them  when  no  one  else  could.    ^\  e  are  not  solicit- 
ing larce  orders  for  future  use.  ,  ,    . ^ 

We  believe  you  are  going  to  see  some  fire  works  in  the  paper  market  soon 
Our  pos  Uve  Ltructions  are  not  to  tie  up  on  any  big  business  and  "o^e 
of  our  salesmen  have  authority  to  bind  our  house  on  any  agreement  as  al 
orders  are  taken  subject  to  acceptance  by  the  house.    So  it  will  be  neces- 
slrffo?  us  to  consult  the  St.  Louis  Office  before  accepting  any  large  orders, 
and  we  cannot  take  any  future  orders  without  author  ty  from  St  I^"is- 
not  even  carloads.     Any  of  our  customers  who  will  place  their   orders 
with  us  and  allow  us  to  place  them  at  the  best  prices  obtainable   will    I 
Jhink.  in  °he  long  run.  fare  better  and  be  better  taken  care  of  than  the 
ones  not  fortunate  enough  to  be  on  our  books  as  our  good  friends, 
"^'o  another  letter  I  givl  you  some  of  the  causes  o^^hes^^  advances  as  y^^^^^ 
salesmen  may  not  be  fully  posted  and  you  can  give  this  letter  to  them 
^  they  can  answer  inquiries  from  their  customers.     We  wish  this  letter 
to  be  noti^  to  you  that,  while  we  will  be  glad  to  take  care  of  your  orders 
fnd  believ?we  will  be  able  to  take  care  of  them  fairly  well,  that  all  former 
Srices  are  abi)lutely  withdrawn,  and  we  can  only  quote  you  from  day  to 
d^v     A  4ttef  plan  would  be  foi^  you  to  place  your  orders  with  us  and  we 
win  a^r^to  handle  them  for  you  on  a  reasonable  profit  and  place  them  at 
tbe  lowest  possible  market  price  the  day  we  receive  the  order. 


INo.  4.] 

The  Clements  Papeb  Company, 

Wholesale  Papeb, 

Nashville,  Tenn. 

To  0T7B  Customers  :  ....     .u^  ^»»/^. 

On  account  of  the  extraordinary  conditions  now  existing  In  the  paper 
industry  all  orders  are  accepted  subject  to  prices  prevailing  at  time  of 
shioment   to  change  without  notice  and  to  our  ability  to  secure  stock 

MUls  are  fined  with  orders  and  are  refusing  to  take  any  new  business, 
«n^  t  is  not  as  much  a  question  of  price  as  it  is  to  get  stock  within  a 
reasonable  time!  a^S  we  a?e  not  certain  just  what  the  cost  will  be  on  many 

^^There  Is  a  shortage  of  wood  pulp,  rags  and  chemicals  used  in  paper 
mak  ne  and  paper  mill  workers  have  been  given  shorter  hours  and  higher 
wages  Unfortunately  this  country  has  been  dependent  on  foreign  countries 
f^r Tlarge  part  of  their  raw  material,  and  prices  have  advanced  to  the 

^%'rfclJ'm  gln^^'rhTv^^  advanced  approximately  30%  on  most  of  the 
stanle  items  used  by  printers,  and  we  will  Issue  a  circular  as  soon  as 
S!caW™glvlng  more  in  detail  the  changes  that  are  taking  place, 
^nderexi^stlng  conditions  we  are  trying  to  give  the  best  service  and  as 
accurate  Information  in  regard  to  the  market  as  can  be  obtained.  Your 
Smers  will  be  fortunate  for  the  next  few  months  In  getting  the  kind 
Sf  paper  tC  desire,  even  at  the  advanced  prices  you  will  be  forced  to 
charge  them. 

Youro,  truly,  Clements  Paper  Company. 

March  24.  1916. 


EXHIBITS. 


[No.  6.] 


159 


TEMPOBABT   NIH"   PEICK  LIST,  ISSUED  APRIL   16,   1916. 

Note.— Use  our  Fall  1915  List  for  Sizes,  Weights  and  Description.^,  but 
This  List  for  Guidance  on  Prices.  ^     ^  ^r,  ^„«„ 

It  is  generally  known  how  seriously  the  cost  end  of  the  paper  manu- 
facturing business  has  been  directly  and  indirectly  affected  by  affairs  m 

^  Ma^'rlals  used  In  paper  making,  such  as  dye  stuffs,  bleaching  powder 
and  sulphite  pulp,  soda  ash.  rags,  casein  and  the  numerous  other  ingr^ 
dlents  have  had  many  sharp  price  advances.  In  addition  to  this,  the 
demand  is  far  m  excess  of  normal.  Hence  It  Is  obvious  that  under  pre- 
varng  conmtlons  there  can  be  no  stability  In  the  selling  prices  of  paper 

This  Temporary  Price  List  represents  the  latest  word  in  prices  at  the 
time  of  going  to  press,  but  we  are  obliged  to  notify  you  that  due  to  uncer- 
taTnty   all  prices  are  subject  to  change  without  notice.    You  are  assured 
however    that  we  will  always  give  you  the  very  best  quotations  on  all 
orders  entrusted  to  us. 

PRICES  SUBJECT  TO  CHANGE  WITHOUT  NOTICE. 

J.  W.  Butler  Paper  Company, 

( Established  1844. )     Chicago, 


[No.  6.] 
Oklahoma  City.  Okla,.  June  2^,  1916. 

general  letter   no.    89. 

Okntucmen-  The  News  Print  Situation  is  getting  worse  instead  of 
befte?™d  several  of  the  mills  are  going  out  of  the  Print  business- 
Kimberly  Clark  Co.,  Rhinelander  and  Dells  Pulp  &  Paper  Co..  three  of  the 
largest  print  mills  are  discontinuing  the  print  business  and  nearly  all  the 
other  mills  are  snowed  under.  

Therefore,  owing  to  the  stiff  advance  put  on  paper  and  scarcity  at  the 
present  t?me.  we  have  found  it  necessary  to  advance  our  prices  as  follows, 
effective  June  26,  1916: 


Ton  lots 
1.000   lbs. 
500 

Bdl   lots 
Ream  lots 
Brkn 


5 
5 
5 
5 
5 


00 
10 
25 
40 
85 


i( 


6  85 


These  nrlces  are  all  f.  o.  b.  Okla.  City.  

If  ^  can  not  get  this  price  for  print  paper  we  want  to  pa^  up  the 
w  ,  ^o  n«r  Qiinnlv  Is  cettine  very  limited  and  we  have  promised  only 
onf  ^r  for  ?uly   and  a  car  In  August,  which  is  the  only 

c?n!>rwp  have  in  sight     We  want  to  take  care  of  our  regular  customers 
'a^  far  as  i^siWe,  s^^^^^^  not  take  on  any  new  print  business,  if  you  can 

^^Jn"^  f  letter  I  received  from   I.  W.  Carpenter  he  stat^   he  had  just 
bought  two  cars  on  the  14th.  for  which  he  was  obliged  to  pay  $3.95. 

Yours,  very  truly.  ^^^^^^   ^^^   ^^^^  ^^^^^^ 

L.   F.   Leach.   Jr. 

[No.  7.1 

Omaha.  Neb.,  June  27.  1916. 
'    Oitntlemen-  I  returned  home  Thursday  morning  from  about  a  week's 
trin  th^^ut  the  paper  making  district  of  Minnesota  and  Wisconsin.     I 
tto'light  you  mighfb^e  interested  in  a  general  way  in  some  things  which  I 
learned  on  this  trip. 


#' 


J 


160  REPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 

There  was  a  slight  rumor  about  a  possibility  of  an  advance  on  flat 
writing  papers  and  bond  papers,  but  I  have  advised  some  manufacturers 
I  have  seen  strongly  against  it  and  I  hope  it  will  not  come  at  this  time. 

I  find  the  market  on  book  paper  especially  stiff.  The  price  went  op 
half  a  cent  per  pound  at  three  different  mills  on  Wednesday  of  last  week 
and  I  find  the  book  paper  mills  crowded  with  business,  most  of  them 
having  sixty  days'  business  on  their  books  and  not  desiring  orders  at  the 

present  prices. 

I  find  the  news  print  situation  quite  serious  on  account  of  three  large 
mills  making  an  aggregate  of  one  hundred  tons  per  day  are  arranging  to 
discontinue  making  news  print  and  get  on  more  profitable  lines.  This 
taken  together  with  the  Increased  consumption  of  nevs  print  by  the 
Metropolitan  dallies  causes  a  shortage  In  the  supply  to  provide  for  the 
demand.  Hence,  the  present  tremendous  prices  the  mills  are  asking  and 
getting  for  paper. 

In  our  experience  in  business  In  Omaha  of  nearly  thirty  years  we  have 
never  encountered  anything  like  the  present  conditions.  In  our  judgment 
it  would  be  well  for  all  users  of  news  print  to  cut  down  as  much  as  pos- 
sible their  consumption  for  a  few  months  or  until  the  war  Is  over.  A 
good  suggestion  from  the  manufacturer  was  that  the  publisher  pass  this 
advance  on  to  the  advertiser  in  slightly  increased  rates  on  advertising. 
It  is  absolutely  necessary  that  all  printers  pass  on  the  increased  cost  of 
paper  on  job  work.  Is  it  not  worth  while  to  increase  also  your  prices  on 
advertising  enough  to  cover  the  Increased  cost  of  news  print? 

Another  thing  which  has  contributed  to  the  high  price  of  paper  Is  the 
foreign  demand.  I  am  told  that  during  the  first  four  months  of  1915  we 
exported  5,000,000  pounds  of  printing  paper  and  during  the  same  period  in 
1916  we  exported  35,000,000  pounds  of  printing  paper,  and  we  had  offered  to 
us  more  than  ten  times  as  much  as  was  accepted  by  the  American  mills. 
The  European  war  has  brought  about  the  above  change  in  international 

commerce.  .     ^  ,„        x 

In  our  Judgment  then  nothing  short  of  peace  in  Europe  will  restore 
prices  on  all  grades  of  printing  paper  to  anything  like  normal  conditions. 
Hoping  your  customers  will  receive  the  necessary  advances  graciously, 
and  with  kind  regards,  we  are, 

Yours  truly,  ^ 

Cabpentes  Paper  CJo. 


[No.  8.1 


To  THE  TBADi: 


July  21,  1916. 


Mill  prices  have  again  been  withdrawn  and  as  a  consequence  we  are  com- 
pelled to  cancel  all  outstanding  quotations  and  prices  listed  in  our  General 
Catalog  No.  10  and  our  Supplementary  Price  List  No.  27.  Until  a  new 
schedule  of  prices  can  be  arranged  we  will  quote  only  on  application. 

Your  Indulgence  during  these  unsettled  times  is  requested. 

Yours,  truly,  ^ 

Zellerbach  Paper  Compant, 

Loa  Angeles     :    San  Diego. 

*"  July  21,  1916. 

Owing  to  the  continued  advances  in  the  price  of  papers  of  all  grades  and 
the  increasing  scarcity  of  raw  materials,  we  find  it  necessary  to  withdraw 

all  prices.  .,    ,  .  .  .,,, 

A  new  price  list  is  now  being  printed,  and  until  this  reaches  you  we  wiU 

be  glad  to  quote  on  request  ^  ^ 

Blakk,  Morrrrr  &  Towne, 

Los  Angeles, 


Effective  Saturday,  July  22,  1916. 

The  continued  disturbed  condition  among  paper  manufacturers  becomes 
more  aggravated  daily,  thereby  creating  a  shortage  In  practically  all  kinds 
of  paper  to  an  extent  that  compels  the  mills  to  make  further  substantial 
advances,  and,  under  these  circumstances,  we  are  obliged  to  withdraw  all 


EXHIBITS. 


161 


outstanding  quotations  and  prices,  and  until  a  new  list  can  be  issued  we 

assure  you  that  on  all  orders  intrusted  to  us  the  lowest  market  prices  will 

be  charged. 

Sierra  Paper  Company, 

126-130  S.  Los  Angeles  St.^  Los  Angeles,  Cal, 


[No.  9.] 


BUY    NOW. 


The  print  paper  market  shows  no  improvement  and  stocks  are  depleted 
generally.  W^e  will  have  another  car  tomorrow  and  can  accept  your  order 
for  Immediate  shipment,  subject  to  prior  sale,  on  the  following  sizes  and 
weights  at  5ic.  Des  Moines,  for  standard  grade : 


24  X 35-32 
30^X44-50 


35X48-64 
35X44-58 


The  situation  is  more  critical  today  than  ever  and  it  is  good  business  to 
buy  now  while  you  can  get  it  at  any  price. 

Western  Newspaper  Union, 
July  28,  19ia  Des  Moines,  Iowa, 


[No.  10.1 

D.  L.  Ward  Company, 
Manufacturers  and  Distributers, 

Offices,  28  South  Sixth  Street, 
Warehouses,  238-240  Queen  Street, 

Philadelphia,  Pa. 

Gentlemen:  Paper  conditions. — In  answer  to  such  questions  as  "What 
are  the  causes  for  the  present  high  prices  of  paper?  "  "  When  do  you  think 
prices  will  decline?  "  which  I  am  being  constantly  asked  as  a  distributer  of 
paper,  and  as  often  asking  myself,  as  a  buyer  of  the  same  commodity,  I 
submit  a  few  facts  that  stand  out  as  the  important  causes  for  the  present 
situation. 

First.  A  large  proportion  of  bleache<l  and  unbleached  sulphite  and 
ground-wood  pulp  that  we  use  in  the  manufacture  of  paper,  has  come  from 
Europe.  The  amount  from  Central  Empires  has  been  entirely  stopped, 
while  the  pulp  from  Norway  and  Sweden  has  materially  decreased.  What 
we  are  receiving  is  costing  double  its  former  value,  due  to  the  present  cost 
of  coal,  labor,  ocean  freight  rate,  and  steamship  insurance. 

/2a5fS.— Fifty  per  cent  of  our  supply  of  rags  comes  from  Europe. 

Chemicals. — Dyes,  chemicals,  felts,  paper  machinery  and  in  fact  every 
other  article  which  goes  into  the  manufacture  of  paper,  has  increased  any- 
where from  twice  to  ten  times  the  price  paid  one  year  ago. 

Labor. — Labor  has  increased  twenty-five  to  fifty  per  cent,  due  to  the  fact 
that  practically  all  mills  have  replaced  the  two-tour  system  with  the  three, 
requiring  three  sets  of  workmen  instead  of  two.  In  many  localities  the 
present  scale  of  wages  that  munition  factories  have  set,  has  had  to  be  com- 
peted with. 

Demand. — The  demand  for  paper  has  increased  thirty  per  cent.  In  my 
opinion,  one  half  of  this  increase  is  actual  consumption,  which  will  con- 
tinue as  long  as  we  have  the  present  prosperity.  The  other  is  speculative 
buying  by  all  types  of  paper  consumers.  This,  due  to  the  present  high 
prices,  will  naturally  discontinue.  This  will  result  to  the  advantage  of  both 
seller  and  buyer. 

High  prices. — The  above  answers  the  first  question,  to  the  best  of  my 
ability,  as  to  what  causes  the  present  high  prices  of  paper. 

Second. — As  to  when  prices  will  decline.  If  you  believe  the  above  infor- 
mation, I  am  sure  you  will  agree,  only  after  the  end  of  the  present  European 
war.  It  will  then  take  some  time  for  prices  to  adjust  themselves  because 
Europe's  pulp  supply  is  greatly  dependent  on  the  supply  of  logs  from  Russia, 
and  no  trees  have  been  cut  in  the  last  year.  It  will  therefore  be  six  months 
to  a  year  before  there  will  be  any  steady  relief  in  sight.    It  is  quite  unlikely 


88569'*— 17- 


-11 


A.- 


162 


|s» 


EEPORT  ON   NEWS-PRINT  PAPER  INDUSTRY. 

that  the  Daper  mills  will  ever  be  able  to  go  back  to  the  two-tour  or 
twelve  houHay  i^  regard  to  labor.  It  is  for  tbis  reason  that  I  doubt  that 
wt^  «bnll  pver  see  the  former  abnormally  low  prices. 

Frm'ri^ce-^n  experience  as  a  very  large  buyer  and  seller  of  practically 
all  tMS^f  pape?  an^d  an  intimate  associate  with  nearly  all  large  manu- 
?«rtnr^rs  leads  me  to  answer  both  questions  quoted  as  above  for  the  guid- 
ance of  my  c'Tt^^^^^^^         others  interested  in  the  purchase  of  paper. 

Yours  very  truly,  ^   ^   ^^^^  Company. 

George  W.  Wabd,  President. 

August  Tenth,  1916. 

P.  s.-By  way  of  comparison,  I  submit  the  following  table  of  importation 

of  sulphite :  importation  of  sulphite  for  year,  ^^^ 

354,000 

1912 __"""  _I     373,466 

1913 458,156 

1914 "  ~  394,  321 

1915 

CJontrast  this  table  with  the  imports  to  date  this  year : 

Imports  of  sulphite  by  months  for  1916,  from  Europe.  ^^^^ 

28,  830 

January __    31, 972 

February __  15, 091 

March _     9,  270 

April II 3,  982 

May 

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Date  Due 


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U.S.  federal  trade  commission 


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industry. 


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END  OF 
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